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

Tactical Asset Allocation (TAA) Monthly Update - April 2013

Tactical Asset Allocation (TAA) Monthly Update - April 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 /]

Previous Month Recap

March concluded a very nice overall first quarter of 2013.  While the month wasn't overly strong, gains made from the previous two months weren't lost either.

Real estate led the way, stocks came in second, gold finished up just a hair, and bonds lost just a hair.  Overall, most balanced investors should have realized consistent, solid, overall returns in the 2%-6% neighborhood for the quarter (depending on how aggressive or conservative they were).

For the month of March the stock market was up 1.20% (as measured by the Vanguard Total Stock Market index fund), bonds were down 0.33% (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 0.44%.  As for the Balanced Tactical Asset Allocation model, it fared very nicely, up 1.72%.

Despite starting the year a touch behind the benchmark, the Balanced Tactical model has surpassed our benchmark and is doing what it's supposed to: staying diversified, but making it's largest holding the most in-favor asset class (stocks/real estate, in this case).

Allocation Changes for This Month

There aren't a whole lot of changes for April in the Model.  Bonds are still close to the lowest allocation the model allows (always at least 50% to stay balanced).  Gold has been reduced again down to just 2%.  Stocks and Real Estate still lead the way amongst the "growth" asset classes, with a slight bit more stocks than real estate.

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.

The model is mechanical, so it takes no lead from my opinions.  My opinion, however, is that stocks will not be able to sustain their current trajectory.  A correction, even if mild, is due sometime in the near future (if not already under way).

Long Term Model Performance Versus Benchmark

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.  If you are not currently a client, and would like to know more about this strategy - feel free to reach out to me directly via this contact form.  If you have general questions, just use the comment form a couple inches below this post.

Thanks for stopping by my blog and have a great day!


Jason Wenk

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Q1 2013 Market Commentary

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