Tactical asset allocation

Deliberate short-to-medium-term deviations from the strategic mix, based on a view about relative value between asset classes.

The evidence on whether it adds value is weak. The deviations are usually small, the transaction costs are real, and the timing decisions are made by the same people whose behavioural biases the strategic allocation exists to constrain.

Where it is used, the discipline is to bound the deviation in advance and to record the reasoning, so the decisions can be scored later.

Most portfolios would do better with a good strategic allocation and no tactics.