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

Best Tactical Asset Allocation (TAA) Strategies - March 2013 Update

Best Tactical Asset Allocation (TAA) Strategies - March 2013 Update

In August of 2012 I wrote a post ranking some of the top Tactical Asset Allocation funds/strategies.  It was at the request of a blog reader who wanted to know how the model I share on this blog stacks up.  You can find that post here. Alas, the same blog reader recently reached out for an update of the original post.  Initially, I thought this would be something I kept up to date each month, but I decided a couple updates per year is probably enough.  After all, CNBC does a good enough job at trying to make investors time horizons as short as possible, no need to compound that effect here!

The TAA Strategies I'm Following

Since my first ranking post one of the strategies has been closed, the MarketSci TAA Model.  Only the developer will know exactly why he chose to close it down, but based on his blog I gather it was due to lackluster performance and interests in other investing methodologies.

This happens.  It happens quite a bit too.

In real estate they say it's all about "Location, Location, Location."  In investments I suppose it's all about "Performance, Performance, Performance."

Once a manager losses it, they seem to close up the fund rather than continue and let it tarnish their reputation.

With one strategy out, it leaves the following in our ranking:

  • Cambria Global Tactical Asset Allocation ETF (GTAA)

  • Northern Trust Global Tactical Asset Allocation Fund (BBALX)

  • Ivy Funds Ivy Asset Strategy Fund (WASAX)

  • USFS Tactical Asset Allocation Fund (USFSX)

  • Goldman Sachs Dynamic Asset Allocation Fund (GDAFX)

  • Meidell Tactical Advantage ETF (MATH)

I'm also sharing the "growth" portion of the TAA model I share on this blog.  For those not familiar with my model, you can read more about it here.

As a side note, the model I share on this blog is really two separate TAA models - one for growth, and one for income.  Since all the funds we're comparing to are growth oriented only, I've extrapolated only the "growth" submodel from my "balanced" TAA model.

The original test started on January 1, 2012, so we'll continue to use that as our inception for ranking purposes.

Tactical Asset Allocation Return Table and Chart

This shows the monthly returns of all the strategies/funds we're comparing.

[table id=21 /]

And here's visual of the hypothetical growth of $100,000 in each of the funds/strategies.  Keep in mind this is frictionless (i.e., assuming no commissions or fees - just the raw performance of each fund/strategy).

Risk Adjusted Returns

One of the primary reasons some people (like me) prefer Tactical Asset Allocation to just buy and hold investing, is to help manage risk.  So, I think that in addition to just looking at total return, we should also rank each strategy by risk adjusted returns (return/standard deviation).  Here's how the various funds/strategies stack up in that department.

  1. Northern Trust Global Tactical Asset Allocation Fund

  2. JasonWenk.com

  3. Ivy Funds Ivy Asset Strategy Fund

  4. Goldman Sachs Dynamic Asset Allocation Fund

  5. Meidell Tactical Advantage ETF

  6. USFS Tactical Asset Allocation Fund

  7. Cambria Global Tactical Asset Allocation ETF

I should note that Northern Trust was way out in front in this category, it was pretty tight between JasonWenk.com and Ivy Funds, and the rest were quite a ways back.

All in all, I'm fairly pleased with where this humble little blog ranks.  Middle of the pack in returns, near the top in managing risk, and near the top in risk adjusted returns.  That said, we've got a ways to go to catch back up to Ivy Funds!

Some Legal Disclosures

It should go without saying, but please do not mistake this post for an investment recommendation.  This is for informational purposes only.  Before you invest in anything, always consult a properly licensed professional, request and read prospectuses, and do your due diligence.  Past performance in no way is indicative of future results.  No investment strategy is assured to protect against losses, including losing your invested principal.

If you have questions or comments - please feel free to reach out.  You can use my contact form here for private messages, or if you would like to add some comments/questions to this post for everyone to benefit from - just scroll down a bit and use the comment feature below.

Regards,

Jason Wenk

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