Global Tactical Asset Allocation

Global tactical asset allocation is in our minds the correct way to diversify and hold for the long term investor. Pension funds and endowment funds the world over should be using some form of GTAA in their investing in order to maximize their returns and even more importantly minimize their risk.

Like any timing system or methodology GTAA is not perfect and occasionally you will lose money. Of course since good GTAA programs use strict risk management rules your risk is relatively defined and limited. This differs from normal asset allocation recommendations because GTAA does not buy and hold no matter what. Instead it only buys when things actually are bullish and you expect a market to go up.

GTAA shares a few things in common with global macro trading programs. In fact global tactical asset allocation shares many things in common. From using multiple asset classes to using timing and valuation models to tell you when the odds say buy and when the odds say sell.

GTAA will typically use valuation to tell you when to size your positions larger or when you should be selling in order to control your risk. GTAA practitioners also regularly use options to generate more consistent alpha with smaller drawdowns.

Happy Trading,
GTAA