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Tactical Investment Process

Tactical asset allocation represents a dynamic approach within the realm of portfolio management. It is an active strategy where the allocation of assets across different categories is adjusted to seize opportunities arising from the market anomalies or the strength of specific sectors. In essence, tactical asset allocation empowers portfolio managers to enhance returns by capitalizing on favorable conditions within the market. This approach diverges from the long-term perspective of strategic asset allocation, which determines the ideal allocation percentages for each asset class over an extended period. Tactical asset allocation, on the other hand, involves actively modifying these target weights for a shorter duration to leverage market or economic prospects. These adjustments can pertain to entire markets or sectors, exemplifying its versatility and adaptability in navigating the ever-changing investment landscape.

Our Tactical Investment Process

Our investment methodology follows a structured, rational, and data-driven approach designed to discover opportunities for growth in rising markets while mitigating risks and exposure during market downturns. Although we acknowledge that no strategy can provide an absolute guarantee of profitability or complete protection against losses, the significance of our process cannot be overstated.

  • Research

We establish clear investment objectives and outline the pool of potential investments from the global capital markets. Our approach allows us to adapt and thrive in constantly evolving market conditions.  We employ rigorous analysis and maintain a disciplined approach, utilizing the insights and expertise of third-party sources known for their unbiased, objective research.

  • Identify

We allocate capital exclusively to both sectors and asset classes that demonstrate a confirmed uptrend and undervaluation, employing a quantitative and technical analysis approach. Cash is considered as an asset class strategically utilized to reduce volatility and potential losses. During periods of advancing markets, we reduce our cash and short-term bond exposure. Conversely, in declining markets, we increase our allocation to cash and short-term bonds as a defensive measure.

  • Invest

We utilize proprietary metrics developed by an external third-party partner to assess both the absolute and relative strength of the different market sectors and asset classes. These metrics offer valuable insights into identifying investments with higher potential for outperformance compared to others. Subsequently, we opt for low-cost ETFs within commission free accounts to minimize expenses.

  • Monitor

We regularly monitor each investment and make tactical adjustments as necessary on a monthly or quarterly basis in response to changes in global capital markets, the business cycle, and specific sectors and/or asset classes. The process is entirely rule-based, which removes any element of subjective opinion from the strategy and disregards market noise that can influence emotional decision making. It is important to note that the objective of this strategy is not to consistently outperform the market or to time the markets perfectly. Rather, it is designed to invest in the strongest areas of the market during favorable conditions and move to cash or cash alternatives during periods of weakness or downturns.

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