Trinity Portfolio (TRINITY)
Developed by Meb Faber · Passive + Tactical Hybrid · Med Risk
The Trinity Portfolio, developed by Meb Faber, bridges the gap between passive investing and tactical allocation by splitting the portfolio evenly between a static buy-and-hold component and an actively managed tactical component. This hybrid architecture directly addresses one of the most persistent objections to tactical strategies: the risk that systematic signal-following will underperform simple buy-and-hold during extended bull markets, eroding investor confidence and discipline.
Faber's design philosophy reflects a pragmatic recognition that most investors are neither pure passive indexers nor committed tactical traders. They want the reliability and simplicity of a diversified buy-and-hold portfolio but also want some mechanism to reduce exposure during genuine bear markets. The Trinity Portfolio serves both impulses simultaneously — the passive half provides the psychological anchor of always participating in market growth, while the tactical half applies Faber's proven trend-following filters to reduce drawdowns.
The passive component holds seven asset classes in equal weight — US equities, international developed and emerging market equities, real estate, commodities, intermediate bonds, and long-term bonds — without any trend filtering or position adjustment. This half of the portfolio is always fully invested, providing continuous exposure to the global investment landscape regardless of market conditions. The tactical component holds the same seven asset classes but applies a ten-month moving average filter to each position independently, moving assets that break below their trend to cash.
The result is a portfolio that is never more than fifty percent in cash — even during the worst bear markets, the passive half maintains full exposure. This structural minimum investment level prevents the total whipsaw cost that fully tactical strategies can experience during choppy markets, while still reducing overall portfolio drawdowns through the tactical half's defensive positioning. The approach has resonated with a significant segment of the investing public that finds pure tactical strategies too active but pure passive strategies too vulnerable.
How It Works
The Passive Component
Fifty percent of the portfolio is allocated to a static, buy-and-hold basket of seven asset classes in equal weight: US equities (SPY), international developed stocks (EFA), emerging markets (VWO), real estate (VNQ), commodities (DBC), intermediate bonds (IEF), and long-term bonds (TLT). Each position receives approximately 7.14% of total portfolio value. These positions are never adjusted based on market signals — they are held continuously through all market conditions, rebalanced only to maintain equal weighting.
This permanent allocation provides the portfolio with a guaranteed baseline of market participation. During strong bull markets, the passive half captures the full upside that tactical-only strategies may partially miss due to trend filter lag. During bear markets, the passive half bears the full brunt of declines in its seven holdings — but because it represents only half the total portfolio, the impact on overall wealth is halved relative to a fully passive approach.
The Tactical Component
The other fifty percent mirrors the same seven-asset allocation but applies Faber's ten-month simple moving average filter to each position independently. When an asset's price is above its moving average, the tactical component holds its full allocation. When the price drops below, that position moves to cash.
The tactical half can be anywhere from fully invested to fully in cash, depending on how many of the seven assets are above their respective trend lines. During bull markets, the tactical component is typically fully invested alongside the passive component, producing a portfolio that behaves similarly to a pure buy-and-hold approach. During bear markets, the tactical positions progressively move to cash as individual assets break their trend lines, reducing the portfolio's total market exposure.
The Hybrid Advantage
The combination produces a portfolio whose risk profile falls between pure passive and pure tactical approaches. The maximum possible cash allocation is fifty percent — achieved only when every single asset in the seven-member universe has broken below its moving average, a condition that occurs only during the most severe market crises. During typical market environments, the portfolio maintains between seventy and one hundred percent invested, providing substantial market participation while retaining a meaningful tactical risk reduction capability.
This structural floor on investment level eliminates the scenario that damages many tactical strategies' real-world performance: extended periods in cash during choppy but ultimately rising markets, where trend filters repeatedly trigger defensive positioning only to reverse shortly afterward. The passive component ensures the portfolio never misses a bull market entirely, even if the tactical half is whipsawing in and out.
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