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<\/p>\nA tactical asset allocation is an investment strategy based on making\u00a0timely changes in the amount, size and holding periods of a variety of securities.<\/p>\n
Most investors hold more than one type of security or investment type. On occasion, they might increase or decrease their positions in each.<\/p>\n
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Tactical asset allocation as an investment strategy means making a\u00a0concerted effort to do so effectively with an eye toward increasing return while not increasing risk.<\/p>\n
Tactical asset allocation has become somewhat of a buzz phrase in the financial planning industry and it can mean a few different things.<\/p>\n
Some firms and investment companies refer to tactical asset allocation as a method of putting a client\u2019s money into an initially diversified bucket that is based on a risk-tolerance questionnaire the client completes or based on the results of a financial plan.<\/p>\n
As\u00a0your age or risk tolerance changes over time the firm will tactically (as they call it) change the allocation in your portfolio to ensure the investments continue to make sense for you.<\/p>\n
Other companies consider\u00a0automatic rebalancing or “auto rebalancing” \u2014 that is, programatically selling certain\u00a0asset classes in order to buy others in the same portfolio \u2014 as one of the features of their tactical asset allocation strategy.<\/p>\n
Finally, some investment advisory firms use technical analysis, including trend-following and relative strength (among other strategies) to change the makeup of a client\u2019s portfolio over time based on market and economic conditions.<\/p>\n
Rather than simply\u00a0changing your portfolio based on\u00a0risk or age, your allocation in this final approach is changed based on which\u00a0investments are in or out of favor, which investments have momentum, and which investments should be completely avoided.<\/p>\n
As such, these investment changes are a\u00a0form of tactical asset allocation.<\/p>\n
In summary, “tactical” can mean any change to your investments in anticipation of change in the economy, the investments themselves or one’s own financial goals.<\/p>\n
The point is to get ahead of coming changes by preparing your investments before events overtake you and force decisions that might not be advantageous if taken under duress.<\/p>\n
MarketRiders, Inc. is a registered investment adviser.\u00a0 Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.\u00a0 Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and\/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.<\/i><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"
A tactical asset allocation is an investment strategy based on making\u00a0timely changes in the amount, size and holding periods of a variety of securities. Most investors hold more than one … Read more