Fintech executive, writer, math geek, and investment systems developer. Founder and CEO of Altruist and Founder of FormulaFolios.

Tactical Asset Allocation (TAA) Monthly Feature for December, 2011

Tactical Asset Allocation (TAA) Monthly Feature for December, 2011

As mentioned in this previous post, I'll be starting a monthly feature on Tactical Asset Allocation (or TAA as it's often referred to).  TAA is the science of measuring relative attractiveness of various asset classes and updating an investors asset allocation accordingly.  For details on the metrics used in the model I'm sharing for free on this blog, check out this post. Based on measurements of both risk and reward, here's the most up to date allocations for the TAA model:

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And here's what the "model" returns would be following this simple rules based, Tactical Asset Allocation model versus a couple benchmarks:

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*NOTE* These returns are model returns and for illustration/research only.  They are NOT actual returns from a managed portfolio.  Returns assume the reinvestment of capital gains and dividends but do not reflect trading commissions.  To help illustrate the potential cost of trading a TAA model the TAA returns are reduced by 0.2% per month.  Past performance is not a guarantee of future results.

The rules for this model are pretty simple.  The model can never be more than 50% growth oriented (allocated to stocks, real estate, and/or gold) and is updated once per month based on the risk and return potential of each of the basic markets it measures.  I post the allocations and model returns not as a recommendation, but to transparently share the merits of using a tactical approach to asset allocation (that is very simple) versus the commonly used buy-and-hold approach advocated (and used) by many.  To be sure investors don't just try to copy these posts in their own portfolio without understanding the model and associated risks I wait a few days after allocation updates prior to sharing.

If you think this would be useful to share - please feel welcome to do so.  If this update is received via email you are more than welcome to forward it to anyone you think would benefit.  If you're reading this from my blog you can use the "social share" buttons below to share via Facebook, LinkedIn, Twitter, etc.

Thanks and have a great day,

Jason Wenk

Market Update - December 8, 2011

Market Update - November 5, 2011