Tactical asset allocation is the process of designating a portion of the portfolio to investment classes that we consider to be non-permanent. We use tactical investments to opportunistically add risk to portfolios when we feel the upside more than compensates for potentially higher levels of expected volatility. Unlike the value driven core investment strategies that remain fully invested during volatile markets, tactical asset classes are often reduced or eliminated and the proceeds can be allocated to less volatile investments, core strategies, and other asset classes or placed in cash/ money market positions.
Tactical Equity Allocation:
Small caps, Mid caps, Emerging Markets, and Developed Foreign are examples of tactical positions on the equity side. We use funds and exchange traded funds to populate tactical asset allocations because of the liquidity, ease of trading, and access to manager expertise.
Tactical Bond Allocation:
High Yield Bonds, Emerging Market Debt (local currencies), Bank Loans (floating rate), and Strategic Income are examples of tactical positions on the fixed income side. We use funds and ETF’s to populate tactical allocations because of the liquidity, ease of trading, and access to manager expertise.
Risk Managed Income:
The Risk Managed Income Strategy strives to generate income while maintaining price stability and daily liquidity. The portfolio owns diversified, high income producing mutual funds and ETFs of various fixed income assets with positive trends and suitable volatility characteristics. The portfolio follows a rules based system, and systematic risk controls trigger a shift to lower risk investments when trend and volatility factors become unfavorable.