Tactical Asset Allocation (TAA)

Definition

Tactical asset allocation is a short-term approach where you change the proportion of different assets in your portfolio. You do this to profit from temporary fluctuations or market conditions.

How it works

Unlike a passive portfolio with fixed weights, exposure to different asset classes (e.g. stocks, fixed income, gold) is adjusted continuously based on trend and risk indicators. The proportion is increased in assets with a positive trend and reduced or switched to cash/fixed income when the trend weakens.

TAA with NeuroQuant

NeuroQuant applies tactical asset allocation in several of its strategies and model portfolios:

Strategies: NQ Full Swing, NQ Global Select, NQ Sector Momentum, NQ Gold Edge, NQ Inflation Shield
Modellportföljer: NQ Tactical Allocation, NQ Global Trend, NQ Sector Allocation USA, NQ Sector Allocation Europe, NQ Hybrid Allocation

Passive vs active allocation

	TAA (active)	Passive allocation
Risk control	Rotating away from weak assets	Always fully exposed
Rebalancing	Frequently (e.g. monthly)	Rarely (1–2 times/year)
Suitable for	Investors who want to follow systematic signals	Investors who wants to have a secure base without active follow-up

Research

The method is well studied in quantitative finance, including Faber (2007), Ilmanen (2011), Moskowitz et al. (2012), Moreira & Muir (2017), Barroso & Santa-Clara (2015).

← Back to the knowledge base