John Rekenthaler: Everyone Wants to Be Tactical at the Wrong Time

Morningstar’s Christine Benz discussed the latest investor fads now being catered to by the mutual fund and ETF industry with John Rekenthaler.

Of all the various categories (alts, multi-asset, etc), John says tactical are perhaps the most-faddish. Although I would say that right around now, after a 20% year-to-date run in the stock market and a few years without a major crisis, is where you’ll see tactical managers be abandoned for more all-in strategies that appear to be “working”.

Here’s John:

Benz: How about tactical asset allocators? That’s another category where we saw a lot of interest several years ago, and then again more recently coming out of the bear market we saw tactical asset allocation getting a lot of interest again. Do you think such funds make sense when you look at their total performance? How have those funds done over time, and do they merit a role in investors’ portfolios?

Rekenthaler: I think these funds clearly have the letters FAD written on their foreheads, more than anything else that we’ve talked about. Frankly, these things just come out exactly at the wrong time, and they disappear. They came out circa 1990 after the 1987 bear market crash. People want to get tactical after they lose money in a crash. They come out and are marketed that you can dodge the next downturn. Of course, there isn’t a downturn for a while because the prices are cheap because you just had a stock crash. It’s the wrong time to be in them. And they were gone by the mid-1990s. This is again a second round. I’ve seen this twice now: the tactical asset-allocation funds that come out in the late ’80s and the tactical asset-allocation funds that came out in 2008. And they tend not to be cheap. They tend to be launched at the wrong time. And when you need them for the next crash, they won’t be around.

This is spot on. It’s very hard to be tactical and diversified across asset classes and still make people happy during a runaway bull market for the S&P. This is especially true when there are no corrections along the way to prove one’s tactical mettle.


Are These Investment Trends Just Fads?  (Morningstar)

Read Also:

Investment Fads and Themes by Year, 1996-2012  (TRB)

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here:

Please see disclosures here.

What's been said:

Discussions found on the web
  1. immediate edge review commented on Sep 22

    … [Trackback]

    […] Read More here on that Topic: […]

  2. blazing trader review commented on Sep 26

    … [Trackback]

    […] Here you can find 91294 additional Info on that Topic: […]

  3. bitcoin loophole review 2020 commented on Sep 28

    … [Trackback]

    […] Read More Information here to that Topic: […]

  4. w88 lite commented on Oct 04

    … [Trackback]

    […] Find More here on that Topic: […]

  5. commented on Oct 19

    … [Trackback]

    […] Info to that Topic: […]

  6. commented on Nov 26

    … [Trackback]

    […] Find More Info here on that Topic: […]

  7. swiss replica watches made china commented on Dec 08

    … [Trackback]

    […] Find More on on that Topic: […]

  8. regression testing commented on Dec 18

    … [Trackback]

    […] Read More Info here on that Topic: […]

  9. rbc royal bank canada commented on Dec 20

    … [Trackback]

    […] Here you will find 24116 more Info to that Topic: […]

  10. diamond art commented on Dec 29

    … [Trackback]

    […] Read More on that Topic: […]

  11. Ativa Networking manuals commented on Jan 19

    … [Trackback]

    […] Find More on to that Topic: […]