HAA Balanced vs Dual Momentum (GEM): differences, results and which one fits you
Both strategies use momentum and both move to a safe asset when the market turns ugly, but they are less alike than they look. This guide compares them using the site's backtest figures and their practical differences.
In one sentence
- HAA Balanced (sheet): diversifies across up to four risk assets and uses inflation-linked bonds (TIP) as its canary.
- Dual Momentum GEM (sheet): puts 100% in a single asset (US stocks, world stocks or bonds) according to the return over the last 12 months.
The rules, side by side
| HAA Balanced | Dual Momentum GEM | |
|---|---|---|
| Signal | Average momentum over 1, 3, 6 and 12 months | 12-month return |
| Assets | 8 risk, 1 canary, 2 safe | 4 (SPY, ACWX, BIL, AGG) |
| Offensive portfolio | Up to 4 assets, 25% each | 1 asset, 100% |
| Defensive portfolio | BIL or IEF | AGG (aggregate bonds) |
| What triggers the safe asset | Canary TIP momentum ≤ 0 | SPY returns less than BIL over 12 months |
Backtest results
Since Sep 2008 for HAA and May 2009 for GEM (with costs of 0.1% per trade):
| HAA Balanced | Dual Momentum GEM | S&P 500 | |
|---|---|---|---|
| Annual return (CAGR) | 9.7% | 9.4% | 10.8% |
| Max drawdown | -9.3% | -19.9% | -50.8% |
| Volatility | 9.1% | 12.8% | 14.7% |
| Time in the safe asset | 29% | 13% | — |
| Annual turnover | 347% | 158% | — |
The starting periods are not identical, so the comparison is indicative. You can change the period and costs in the comparison tool. Remember these are simulations: read the risks of backtesting.
Differences that matter in practice
- Concentration. GEM is always in a single asset: if it is wrong, the whole portfolio suffers. HAA spreads the risk across several.
- Number of trades. GEM switches assets rarely; HAA can move several assets every month. This affects commissions and taxes.
- Simplicity. GEM requires following four assets and one comparison; HAA, ten assets and a ranking.
- What the alarm watches. HAA looks at inflation-linked bonds; GEM compares stocks with cash.
Which one fits you
- If you prefer few trades and a rule that is easy to follow (and tolerate being concentrated), GEM is simpler.
- If you prefer to diversify and can take more orders a month, HAA spreads better.
- With a small portfolio, look at the cost per order: it can tip the decision.
This is not a personalised recommendation: it depends on your capital, your horizon and your tolerance for drawdowns.
Frequently asked questions
Can both be followed at once?
Yes, but it doubles the management and can mix assets in the same account. Before combining them, check how much operations and commission each adds.
Which has the smaller maximum drawdown?
In the backtest, HAA's maximum drawdown is -9.3% and GEM's is -19.9%. These are historical values: they do not anticipate future ones.
Which ETFs do I need for each?
GEM needs fewer products. The tickers are listed on each strategy's sheet.
What is this month's signal?
You have it on the home page and in the monthly signals archive.