Chasing Trends, Losing Wealth: The Tactical Allocation Trap

Market Timing vs. Long-Term Investing

Have you ever wondered if moving your portfolio allocations around can lead to better returns? To help answer this question, one just needs to look at how tactical asset allocation (TAA) funds have performed over time. Have these TAA funds really helped investors navigate market uncertainty?

In today’s episode, Keith and Marcelo break down a compelling new study from Morningstar that examines the long-term performance of tactical asset allocation funds. With a data-driven approach, they discuss how these funds performed over different market cycles, what role predictions play in their effectiveness, and how investors should think about market timing or shifting allocations.

What can individual investors and advisors learn from the poor performance to TAA funds on how they manage their own or clients accounts? Join us as we analyze the risks, returns, and emotional biases behind tactical asset allocation, and reveal why a structured, long-term investment strategy may be the best approach for most investors.

Thank you for tuning in!

The Truth About Tactical Asset Allocation

• Introduction to tactical asset allocation funds (3:19)
• How these funds differ from strategic asset allocation (5:15)
• Morningstar’s latest research on performance (7:06)
• The underperformance of tactical funds over time (9:00)
• Examining risk: More volatility, lower returns (15:17)
• Why market predictions often fail (22:16)
• Major firms’ incorrect forecasts for 2024 (25:23)
• The psychological traps that cause investors to underperform (20:17)
• Lessons from history on the unpredictability of events (27:17)
• Key takeaways: Why “doing nothing and staying the course” is often the best move (28:28)
• Closing thoughts on long-term investment success (29:59)

And much more!

Mentioned in this Episode:

• Tulett, Matthews & Associates
• Why Tactical-Allocation Funds Failed—Again | Morningstar

Thanks for Listening!

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