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

Tactical Asset Allocation (TAA) Monthly Feature - January 2013

Tactical Asset Allocation (TAA) Monthly Feature - January 2013

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. [table id=6 /]

In December the market was focused on the "Fiscal Cliff" and its potential implications should no resolution be reached.  As such, pretty much all asset classes struggled the first few weeks.  Once The Cliff was avoided...well, the markets took off.  Although not an amazing month, it was pretty solid and this end of month pop did take stocks out of the red.

For the month the stock market was up 1.29% (as measured by the Vanguard Total Stock Market index fund), bonds were down 0.18% (as measured by the Vanguard Total Bond Market index fund), and a 50/50 blend of the two (our benchark for this model) was up 0.55%.  As for the Balanced Tactical Asset Allocation model, it finished up 0.54%.

For the calendar year 2012 the model has trailed the benchmark slightly, but managed the volatility a touch better.  All in all exactly what I would expect in a rather good, but volatile year.

Going forward the model will further balance out the "growth" components of the allocation.  Instead of significantly larger weights to stocks and real estate - stocks, real estate, and gold are all pretty close to equal.  Bonds remain the largest asset class representing 54% of the total model (which is pretty normal for this model - see below for why).

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:

[table id=5 /]

I've also added some long term metrics on return and risk here (complete with data going back to 1997):

[table id=9 /]

To see how performance is measured just check out the static page on TAA here. **Note** I only update the long term metrics quarterly versus monthly like the other tables above.

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.


Jason Wenk

Market Update - January 14, 2013

Market Update - January 14, 2013

Fiscal Cliff Update

Fiscal Cliff Update