Building a portfolio
Tactical asset allocation
Deliberately moving away from your long-term target to reflect a shorter-term view.
How it works
A tactical tilt is an active bet: overweighting one region, sector or asset class relative to the strategic target, with the intention of reversing it.
It should be sized, dated and reviewed. A tilt with no defined size and no exit condition is not a tactic; it is a permanent change to the allocation that nobody decided to make.
Where it misleads people
Most tactical decisions are indistinguishable from performance-chasing after the fact. Writing down beforehand what would make you wrong is the only reliable way to tell the difference later.
Related terms
- Strategic asset allocationThe long-term target mix you intend to hold through cycles, set from your goals rather than from market views.
- Market timingTrying to buy before rises and sell before falls, rather than staying invested throughout.
- DriftHow far your actual weights have moved away from the weights you intended to hold.
- Investment policy statementA written document setting out what you are investing for, how, and what would make you change.
More in Building a portfolio
- Asset allocation
- Concentration risk
- Sequence-of-returns risk
- Core and satellite
- Safe withdrawal rate
- Correlation
- Risk tolerance
- Covariance
All 20 Building a portfolio terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.