Definitions
The process involves allocating assets based on an objective, measurable and testable decision-making process. We see an objective process as one with integrity as all decisions are based on the principle of evidence-based practice. Tactical decision making is driven by data from different indicators including but not limited to economic, fundamental, technical and market sentiment data. These indicators are used in combination as a decision-making process to tactically allocate capital to equities, bonds, property, offshore equity and commodities through low cost exchange traded funds.
Integrity and accountability. The basis of every decision is testable and can be accounted for. It also offers the opportunity to constantly improve and develop. An objective decision-making process further protects one from human emotion that can potentially cloud one’s judgement when it comes to making decisions.
Tactical Asset Allocation
Asset allocators tend to have a long-term strategic allocation to different asset classes that is normally a long-term average allocation to each asset class that is believed to be the allocation to reach the desired outcome over the long term.
Tactical asset allocation is the way to tactically allocate assets in the shorter term. These tactical allocations could be overweight or underweight the strategic asset allocation. Tactical Allocation is the heartbeat of active management and has the potential to add significant value or vice versa.
We do not have a specific strategic allocation in mind for a portfolio to achieve a certain goal. We rather have an intended maximum allocation to any asset class, and we rely on our tactical process to determine what percentage of the intended maximum allocation should be at any one time.
Our Tactical decision making is driven by data from different indicators including but not limited to economic, fundamental, technical and data from sentiment indicators. These indicators are used in combination as a decision-making process to tactically allocate capital to equities, bonds, property and offshore equity every month.
Unique Selling Propositions
The process is testable, unbiased, unemotional, cost effective and we are not stock pickers. Our process tends to “under allocate” to risky assets over the long term.
Description and Classification
The ETF’s used in the portfolio are simply used as vehicles to access the different asset classes. The Satrix ALSI Top 40 Fund for example is used for SA Equity exposure. The weight allocated to this ETF is tactically managed on a regular basis and therefore actively managed. The ETF is simply the instrument used to access the needed exposure to a specific asset class.
Our Tactical Allocation process enables us to tactically invest in certain times within a specific asset class and if we are under allocated the under allocation is parked in cash. The under allocated exposure at times, the exposure to cash in such times and the lower draw downs because of lower allocation in conjuction with the prominent inclusion of property, credit and gold as separate asset classes are some of the main drivers of our returns.
Gold is accessed through the NEWgold ETF. Gold is treated as a risk asset exactly as equities and property for example. Tactical allocation to gold is done through our process like we do with all other asset classes. Our view of gold is that it has significant diversification capabilities given that the allocation is actively managed as per our process. We will not be passive owners of gold in the portfolio.
Accessibility
Yes, the portfolios are accessible through all investment products offered on the Allan Gray, PPS, Ashburton. Momentum Wealth and Investec Investments platforms. These products include tax free investments, unit trusts, endowments, retirement annuities, Preservation funds and Living annuities. Both Steer Portfolios are also regulation 28 compliant.
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