Below are the most up to date allocations for the Tactical Asset Allocation model I’ve written about on the blog. For those needing a refresher on what TAA is and why I think it’s important as part of an investment plan just click here to revisit the first post.
| Stocks (Vanguard Total Stock Market ETF as proxy) | Bonds (Vanguard Total Bond Market ETF as proxy) | Real Estate (Vanguard REIT ETF as proxy) | Gold (SPDR Gold ETF as proxy) | |
|---|---|---|---|---|
| September 2011 | 0% | 55% | 7% | 38% |
| October 2011 | 0% | 62% | 0% | 38% |
| November 2011 | 0% | 60% | 0% | 40% |
| December 2011 | 0% | 58% | 0% | 42% |
| January 2012 | 0% | 71% | 0% | 29% |
| February 2012 | 4% | 57% | 9% | 30% |
| March 2012 | 17% | 58% | 12% | 13% |
| April 2012 | 17% | 55% | 18% | 10% |
| May 2012 | 16% | 61% | 23% | 0% |
| June 2012 | 5% | 69% | 26% | 0% |
| July 2012 | 13% | 61% | 26% | 0% |
| August 2012 | 13% | 62% | 25% | 0% |
| September 2012 | 17% | 58% | 25% | 0% |
| October 2012 | 18% | 55% | 18% | 9% |
| November 2012 | 21% | 59% | 15% | 5% |
| December 2012 | 22% | 57% | 17% | 4% |
| January 2013 | 19% | 54% | 15% | 12% |
| February 2013 | 25% | 50% | 17% | 8% |
| March 2013 | 23% | 54% | 19% | 4% |
| April 2013 | 24% | 52% | 22% | 2% |
| May 2013 | 20% | 56% | 23% | 1% |
| June 2013 | 29% | 55% | 15% | 1% |
In the 11 months I’ve freely shared this model on my blog it has proven to provide a balanced way to achieve growth, while also managing the risk of April/May/June also.
July was a solid, though not spectacular month for the model, posting a 1.59% return. The positive return though was just part of the story, however, as the way the model managed July’s volatility is what really stood out. You can see that via the daily chart below:
The dark blue line is the model – the light blue is the S&P 500. What’s obvious is that the model was largely unaffected by the volatility of the stock market – exactly what the model attempts to do. Much of this steady performance came from the model’s two largest holdings, bonds and real estate, producing steady returns in spite of the stock market’s volatility.
The model still has no gold, which has served it well the past few months. For August the model is not changing much at all. It will still emphasize bonds and real estate, but continues to keep a modest allocation towards stocks.
Since the model I share here is “balanced” keep in mind it always keeps at least 50% of the portfolio in either bonds or cash. The whole idea of this balanced tactical asset allocation (TAA) approach is to keep a highly diversified portfolio that can get through the markets major ups and downs without the dizzying volatility of just growth investments. It’s not perfect, but so far so good.
For those that want to track the performance of this model here’s the most up to date info:
| Balanced Tactical Asset Allocation Model | 50% Total Stock Market 50% Total Bond Market |
|
|---|---|---|
| 2005 | 6.60% | 4.31% |
| 2006 | 13.33% | 8.70% |
| 2007 | 5.93% | 4.99% |
| 2008 | -0.96% | -18.99% |
| 2009 | 24.21% | 13.36% |
| 2010 | 15.51% | 8.08% |
| 2011 | 0.38% | 3.33% |
| 2012 | 8.10% | 9.36% |
| 2013 (as of 6/1) | 4.56% | 6.13% |
I’ve also added some long term metrics on return and risk here (complete with data going back to 1997):
| Balanced Tactical Asset Allocation Model | 50% Total Stock Market 50% Total Bond Market |
|
|---|---|---|
| Annualized Return (as of 5/1/2013) | 8.97% | 6.40% |
| Risk (5 Yr Standard Deviation) | 8.95% | 12.32% |
| Best Month | 5.03% | 5.85% |
| Worst Month | -5.06% | -10.10% |
To see how performance is measured just check out the static page on TAA here.
As mentioned in past posts I’ll update this model/strategy each month roughly 1 week into each new month. This way scalpers can’t just steal the research as their own and other financial professionals can’t simply use the research to manage their clients money.
If you like what you see here feel free to pass this on to others via email, use the Facebook icon below to share it there, or just suggest in personally to a friend.
Thanks for checking out this post and have a great day.
Regards,
Jason Wenk
