Tactical Management

Tactical Asset Allocation is accomplished by taking a more active approach to our Strategic Allocation process. We add value by taking advantage of opportunities as the market presents them. Like all of our processes, we make these moves objectively, without emotion, based on time-tested research.

We have developed our own proprietary allocation process, which begins by distilling a universe of mutual funds into manageable groups. Using our in-house correlation methodology to group funds that have historically acted similarly, we essentially develop style boxes. But rather than working with the traditional nine styles identified by Morningstar, we create approximately 50 groups. Each group contains funds that, by definition, have performed differently than their peers over time.

The next step in the process is objectively choosing the most representative fund from each group. These funds are then combined to create a universe of complimentary assets. The blending process strives to find the best performing mix of funds, taking into account both volatility and return. There are literally trillions of combinations possible, so we have developed an algorithm to prune the possibilities to produce results that are consistent with targets designed to meet most risk profiles. As a result, not all funds from the original universe may be used.