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Strategic Versus Tactical Asset Allocation

Posted by Brent Everett on Friday, February 11, 2011 in Unconventional Wisdom

We've compared the performance of a strategic asset allocation portfolio model to the universe of mutual funds, many of which employ active management - including tactical asset allocation, on a regular basis since 2008. The papers examine both pre-tax and after-tax 10 year risk-adjusted returns. The most recent update, based on data from 26,564 mutual funds, ETFs, and holding company depository receipts is now posted on the home page of our website. You can read it here. If you'd like to read one of the previous versions, simply request it via email to one of our advisors.

Strategic asset allocation as an investment management policy is based on studies that have found that portfolio return is primarily determined by asset class exposure, whereas tactical asset allocation attempts to predict future returns of asset classes and weight them to increase return, reduce risk, or both. The data presents a compelling case for strategic asset allocation and further supports the conclusions of other studies that have found that active management, including tactical asset allocation, adds no value.

The report contains performance information for a strategic asset allocation portfolio and is subject to the same disclosures as the performance information posted on our website. Read the applicable disclosure information here.

Tags: active management, asset allocation, passive management, portfolio

Brent Everett

Brent Everett founded Profisys, LLC, a fee-only Registered Investment Advisor, in 1998. While acting as Managing Director of that firm, he developed the investment philosophy and the portfolio models currently used by Talis Advisors. He earned a B.S. in Computing and Information Sciences from Oklahoma State University. Mr. Everett’s background includes experience in strategic marketing, executive management and investor relations at Texas Instruments, Samsung Semiconductor, EDI, CSCI, and his own consulting practice. Brent served on the Board of Directors for CSCI, where he helped structure and negotiate management's successful purchase of the company.

Mr. Everett has been a member of the Financial Planning Association, where he was elected to the Board of Directors of the local chapter, the International Association of Financial Engineers, the Econometrics Society, the Association of Pension Professionals and Actuaries Benefits Council, the Estate Planning Council of North Texas and Mensa. He has discussed small cap stock investing on CNNfn and his views regarding investment advisor disclosure have been quoted by several major publications. Along with Scott Maxwell, Brent has been the cohost of The Peaceful Wealth Radio Hour on CNN. He was named as one of Texas Monthly magazine's "5 Star" wealth managers in 2010 and 2011 and one of D Magazine's top wealth managers in 2010.

Mr. Everett lives in Plano with his wife and their Labrador Retreiver. He has served as a member of the Business and Professional Leadership Committee of the Plano Symphony Orchestra, and enjoys reading, fly fishing, college sports, and Formula One racing.