Tactical Asset Allocation (TAA) Update - June 2014
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
2014 is nearly halfway through - WOW how time flies! While the year has been a little more volatile than 2013, it's broadly been a solid year with almost all asset classes at least slightly positive through the end of May.
For May US Stocks were up 2.1%, International Stocks were up 1.9%, Real Estate was 2.9%, Gold was down 3.0%, and Bonds finished up 0.8%. Our Balanced Tactical model finished up 1.61%. The blended benchmark of 50% Vanguard Total Stock Market / 50% Vanguard Total Bond Market was up 1.50%.
YTD the model is slightly outpacing the benchmark, and doing so with slightly less volatility. It's been awhile coming, however, as the model has slightly lagged the benchmark for the past couple years (although it's done so with less volatility).
Allocation Changes for This Month
There have been very few allocation changes this year for the model. It still favors US stocks over all other asset classes, but is broadly diversified, holding all asset classes except Gold at this time.
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:
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I've also added some long term metrics on return and risk here (complete with data going back to 1997):
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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!