Balanced Mode: The Risk-Adjusted Alternative

What Balanced Mode Does

Balanced mode runs the same 3-way momentum ensemble as Max Growth, with one addition: a defensive override. When all three equity funds (C, S, and I) show negative 63-day momentum simultaneously, the model moves to 100% G Fund instead of defaulting to C.

The rest of the time, Balanced mode is identical to Max Growth — same Wednesday rebalancing, same ensemble voting, same fund selection. The override only triggers during broad equity drawdowns when no equity fund has positive momentum over the past three months.

When the Override Triggers

The check is simple: at each Wednesday rebalance, compute the 63-day trailing return for C, S, and I funds. If all three are negative, move to G Fund. If even one is positive, follow the normal momentum signal.

In backtesting (2010-2026), this override triggered during:

• The COVID crash (March 2020) — all equity funds fell simultaneously
• The 2022 bear market — stocks and international both declined for months
• Brief correction periods in 2011, 2015-2016, and 2018

The override fires rarely — most of the time all three equity funds don't go negative at once. When it does fire, it's during genuine crises where G Fund's guaranteed return beats riding out the storm.

Backtest Comparison (2010-2026)

Metric	Max Growth	Balanced
Total Return	1,069%	887%
Final Value ($100k)	$1,169,028	$986,729
Annualized Return	16.9%	15.7%
Sharpe Ratio	0.96	1.14
Sortino Ratio	1.22	1.39
Max Drawdown	-33.7%	-23.9%

The Tradeoff

Balanced mode sacrifices $182,000 in terminal value (15.6% less) in exchange for:

• 19% higher Sharpe ratio (0.96 → 1.14) — better risk-adjusted returns
• 14% higher Sortino ratio (1.22 → 1.39) — less downside volatility specifically
• 10 percentage points less drawdown (-33.7% → -23.9%) — the worst drop is $24k instead of $34k on $100k

On a $100,000 account, the difference is about $182,000 over 15.7 years. On a $500,000 account, it's about $910,000. The dollar cost of safety scales with account size.

Who Should Use Each Mode

Max Growth is better if you:

• Have 15+ years until retirement
• Won't override the system during a -30% drawdown
• Want maximum terminal wealth and can tolerate the ride
• Have other income sources (FERS pension) that reduce TSP dependency

Balanced is better if you:

• Are within 10 years of retirement (sequence-of-returns risk)
• Know you'd be tempted to panic-sell during a crash
• Prefer a smoother equity curve even at the cost of total return
• Want the highest risk-adjusted return (Sharpe 1.14 is exceptional)

Technical Details

The override uses a single lookback window (63 trading days, approximately 3 months) rather than the blended lookbacks in the ensemble. This was chosen after the quant team reviewed multiple parameterizations:

• 42/63-day check: Sharpe 1.14, DD -23.9% — selected as the best balance
• All-lookback check: Sharpe 0.98, DD -30.8% — too conservative, triggers late
• Volatile-regime check: Sharpe 1.06, DD -23.9% — adds complexity without improvement

The quant team noted that the 42/63d parameterization may be partially overfit to the 2010-2026 window, particularly to the speed of the 2020 crash. The 63d-only check was selected for production as a more robust signal. If you're choosing Balanced, you're betting that future crises will have a similar multi-month buildup — which is true for most bear markets but not for flash crashes.

Note: Both modes follow the same momentum signal when markets are healthy. The Balanced override only kicks in during broad equity drawdowns. Most weeks, the two modes recommend the same fund.

How It Appears on the Dashboard

The dashboard shows both allocations side by side with a toggle switch. When the override is active (all equity funds negative), the Balanced view displays a warning banner explaining why it differs from Max Growth. The allocation history tracks which mode you followed.

The portfolio tracker on the homepage runs both strategies in parallel so you can see the real-time performance difference.