Tactical asset allocation and global macro trading have many similarities. The basic idea behind both strategies is to look at each asset class to help determine where you can get the best risk adjusted return. The similarities are so strong that many people refer to both strategies as the same thing.
Global tactical asset allocation is a dynamic asset allocation process. Instead of just deciding on an optimal allocation and rebalancing each year the tactical asset allocator will attempt to take advantage market dislocations in order to generate higher returns and even more importantly do it with less risk. Global tactical asset allocators will build valuation and risk models for every market they can find and then allocate depending upon which asset shows the most potential.
Tactical asset allocation and global macro investing have a lot in common. Where the asset allocator will have X% in stocks and X% in bonds and then adjust as opportunities arise, the global macro investor will only invest where there are good risk to reward opportunities.
One of the primary differences between global macro and tactical asset allocation is that most asset allocators will always be at least partially invested in each of their pre-selected asset classes. That differs from the global macro investor who will only go where they see a great opportunity now, and not 5 years later.
Tactical asset allocation tries to combine standard asset allocation along with global macro trading in order to achieve higher returns then buy and hold while holding less than market risk. As anyone that has traded for a long time knows, risk reduction is one of the best things that traders can do to improve their results.
Since tactical asset allocators and global macro traders have so much in common it makes sense for both of them to learn from each other and use the useful tools and methods they have developed. Most traders would be wise to adopt tools from a variety of practitioners.
Combining asset allocation principles along with global macro strategies can help you in your investment results. The truth is that anytime you can do something to get a better grip on true value of an asset class and the potential return the better off you are. If you are into global macro then you are well advised to look into tactical asset allocation as well.
Global tactical asset allocation is a dynamic asset allocation process. Instead of just deciding on an optimal allocation and rebalancing each year the tactical asset allocator will attempt to take advantage market dislocations in order to generate higher returns and even more importantly do it with less risk. Global tactical asset allocators will build valuation and risk models for every market they can find and then allocate depending upon which asset shows the most potential.
Tactical asset allocation and global macro investing have a lot in common. Where the asset allocator will have X% in stocks and X% in bonds and then adjust as opportunities arise, the global macro investor will only invest where there are good risk to reward opportunities.
One of the primary differences between global macro and tactical asset allocation is that most asset allocators will always be at least partially invested in each of their pre-selected asset classes. That differs from the global macro investor who will only go where they see a great opportunity now, and not 5 years later.
Tactical asset allocation tries to combine standard asset allocation along with global macro trading in order to achieve higher returns then buy and hold while holding less than market risk. As anyone that has traded for a long time knows, risk reduction is one of the best things that traders can do to improve their results.
Since tactical asset allocators and global macro traders have so much in common it makes sense for both of them to learn from each other and use the useful tools and methods they have developed. Most traders would be wise to adopt tools from a variety of practitioners.
Combining asset allocation principles along with global macro strategies can help you in your investment results. The truth is that anytime you can do something to get a better grip on true value of an asset class and the potential return the better off you are. If you are into global macro then you are well advised to look into tactical asset allocation as well.
About the Author:
Dagny helps investors find great Global Macro Trading opportunities. Tactical Asset Allocation is but one of the many strategies that we use to help find the best risk to reward opportunities across the globe.
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