- Limit losses in market falls.
- Calculated risks and tactical necessity.
Straight up, we must acknowledge the system we’re about to discuss incurs higher costs. But even allowing for that, it would have kept pace with the 21st century total returns from the MSCI World index of developed market shares. More strikingly, our tactical asset allocation (TAA) framework would have kept falls in the value of our strategic portfolios to well below 10 per cent.
Back testing is never the same as a live track record, but over a timeframe including the dotcom bear market, global financial crisis, Covid and the subsequent inflation bust, any system that takes the sting out of such tough spells is worth considering. Especially one that, as well as limiting losses, stays under water for far less time than global shares after a sell-off.