Tactical Investment Allocation

Tactical Investment allocation is different from passive investing or dynamic investment management. Tactical Investment allocation service is an active strategy focused on: (a) Investment Portfolio growth in “bull” markets (long only); and (b) Preserving investment capital in “bear” markets by moving funds into cash position to protect capital.
 
Investment Portfolio derisks by moving 100% into cash during tough economic times, avoiding increased volatility to preserve capital while the market is in a downturn trend. This investment strategy is tactical and active and is better to lower tax structures such as SMSF superannuation funds. The investment analysis is trend based and is hence unemotional, disciplined and objective.
 
DeBondt & Thaler discovered the momentum effect back in the 1980s and it was since researched in many global equity, bond and other markets. Dreman & Lufkin supported the discovery finding that strong initial momentum performance leads to outperformance over the medium to long term. Larson & Madura research confirms that momentum-based investing strategies could generate excess investment returns in shares. Academic research by Loughran & Ritter and Gant also confirm the existence of excess returns to momentum-based investing in equities, including the Australian stockmarket.
 
These are three steps in this Tactical strategy:
  • Identifying if the stockmarket showing positive (A) or negative (B) long-term trend momentum.
  • If (A) the investment portfolio remains invested and strategic rebalancing is conducted reviewing asset allocation.
  • In case of (B) the investments are sold to cash to preserve capital. Investment capital preservation is the key.
This feature moving up to 100% of investment portfolio to cash prevents the investment portfolio from evaporating in sustained stockmarket corrections. As this investment process is objective it offers an advantage in volatile stockmarkets where rapid crashes and rebounds and fear may negatively weigh on investors’ investments decisions.
 
Tactical Investment Momentum Service provides additional investment portfolio diversification due to its uncorrelated returns to typical equity managed funds and could become a valuable addition to your strategic long-term bespoke portfolio management on a Core-Satellite basis.
 
Contact us to review your existing investments today or ask a question now to see if this is a service that could add value to your investment portfolio as on Core-Satellite approach.

 

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