Trends Watch: Tactical Asset Allocation

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks with Brian Hunter, Managing Director, Strategic Capital Allocation Group.

What is your outlook for tactical asset allocation?

Tactical asset allocation (TAA) as an overall investment category will be stressed.  Multiple pressure point realities are beginning to impact the seemingly endless bull markets.  Too many TAA strategies are tied at least in part to market momentum.  As an anecdotal, yet prescient example, in the first seven days of July, a major TAA category index was down about -79 basis points -- not the nimble core reserve that investors are seeking as asylum from accompanying flattish equity and 60/40 numbers. 

Where do you see the greatest opportunities and why?

Risk-controlled, liquid, non-momentum strategies with both strategic vision and tactical agility.  Defense really does win championships.  Protecting the core portfolio as a call option on opportunity will be essential moving forward.  Perceiving an opportunity without the means to benefit is senseless.  Luck is when opportunity meets preparation.  Defending the core and having the liquidity to pounce opportunistically will be valued more than great paper returns that you cannot touch.

What are the greatest challenges you face?

Meeting investors who have not been seduced by hubris and greed working in tandem against their own best interest.  Brit Hume came up with my favorite definition of “hubris:”  “An unshakable belief in one’s own infallibility.”

What keeps you up at night?

Developing global economic-political storms unchecked by a respected, powerful broker of reason.

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.