The Problem: Old-School Tactical Investing Didn’t Work
In the past, tactical mangers often focused on what is referred to as “directional” or “binary” investing, which utilized an all-in, all-out approach to the markets. Often termed “market timing,” such an approach effectively led to managers being “all right” or “all wrong” with their positioning.
It is the latter that helped create a less than positive view of tactical investing – especially in the popular press. Too often, such an approach led to the “singular failure” of portfolios, where returns fell well short of the market. As such, many have concluded that tactical investing simply doesn’t work. To which, TFA says, poppycock!
TFA strongly believes that “when you buy and sell” in your portfolio as well as “what you buy and sell” certainly matters and that managing risk in a portfolio during bear market cycles is “mission critical.” The key is to upgrade the old-school tactical strategies to something more appropriate to today’s fast-moving markets.
The Solution: A Modern Approach to Tactical Investing
At TFA, we believe the best approach to investing for the long-term is to employ a modernized version of the tactical methodology. An approach that adapts to changing markets, seeks out opportunities, and most importantly, manages risk.
Put simply, TFA believes portfolios should strive to outperform their benchmarks. They should have the flexibility to “be in the right place, at the right time.” To manage risks during severely negative markets. And to avoid the “singular failure” problems of old-school tactical strategies.
Instead of focusing on a single all-in, all-out strategy, TFA believes in an updated approach to portfolio design. Something we call Tactical 2.0, which focuses on modern portfolio design, modern diversification, as well as risk and volatility targeting.
TFA’s Tactical 2.0 Portfolios utilize:
- Multiple Investing Methodologies
- Multiple Portfolio Management Strategies
- Multiple Timeframes
- Multiple Managers
As opposed to all-in/out, old-school tactical strategies, TFA Funds are diversified by methodology, strategy, timeframe, and managers. Which, in our view, is a more modern approach to tactical asset management.
