MULTI-ASSET STRATEGIES

Global Tactical Asset Allocation (GTAA)

Capital at risk. All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed.

What is Tactical Asset Allocation?

Tactical asset allocation (TAA) is a multi-asset investment approach that encompasses a range of top-down macro investment strategies. The primary objective of tactical asset allocation is to deliver excess returns to a portfolio via asset allocation (at the asset class, country, and/or sector level) rather than through individual security selection. The investment horizon for a TAA manager typically ranges from 3 months to 1 year.

A TAA portfolio manager actively allocates across assets according to their assessment of opportunities and risks in the prevailing market environment. TAA mandates have flexibility on multiple dimensions, enabling managers to continuously and dynamically shift positions across various asset classes and instruments. TAA seeks to deliver attractive risk-adjusted returns while managing risk and potentially controlling drawdowns.

Why BlackRock for GTAA?

BlackRock’s Global Tactical Asset Allocation (GTAA) strategies are highly diversified and invest across a wide opportunity set of global equities, bonds and currencies, taking positions across multiple geographies and time horizons. Our team possesses decades of direct experience partnering with clients to deliver meaningful performance, diversification and capital efficiency.

Learn more about Global Tactical Asset Allocation at BlackRock

What is Tactical asset allocation?

Tactical asset allocation (TAA) is a multi-asset investment approach that encompasses a range of top-down macro investment strategies. The primary objective of tactical asset allocation is to deliver excess returns to a portfolio via asset allocation (at the asset class, country, and/or sector level) rather than through individual security selection.

A TAA portfolio manager actively allocates across assets according to their assessment of opportunities and risks in the prevailing market environment. TAA mandates have flexibility on multiple dimensions, enabling managers to continuously and dynamically shift positions across various asset classes and instruments. TAA seeks to deliver attractive risk-adjusted returns while managing risk and potentially controlling drawdowns.

Short- to medium-term time horizon (3 months to 1 year)

Short- to medium-term time horizon (3 months to 1 year)

Source: BlackRock. For illustrative purpose only.

Why does TAA work?

We believe skillful investors can generate returns from TAA by exploiting:

  • Variation in rewards for bearing risk
  • Market segmentation and structural impediments
  • Information and processing asymmetries
  • Non-alpha seeking market participants
  • Behavioral biases

Investment philosophy

We believe that we can generate performance by taking advantage of information asymmetries and behavioral biases among investors, as well as non-alpha seeking market participants, which create gaps between the macroeconomic environment and what’s priced in markets. We employ two complementary processes to seek to exploit these gaps: (1) a discretionary process that takes advantage of time varying, episodic mispricing opportunities and (2) a systematic process that takes advantage of more widespread, consistent mispricing opportunities.

Three core beliefs underpin our investment philosophy:

  1. Tactical asset allocation is a diversifying source of performance
  2. Combining multiple strategies increases the likelihood of investment success
  3. Advances in data and data science are revolutionizing macro investing

Investment strategies

As of 30 June 2019, the GTAA team had $30+ billion USD in assets under management including mandates for institutional clients such as insurance companies, central banks and pensions, as well as outcome-oriented mutual funds and separately managed accounts for individual investors.

Custom multi-asset portfolios

Our integrated public markets investment portfolios capture a full spectrum of performance drivers (beta, tactical asset allocation, active security selection, factor harvesting) customized to client objectives including absolute, relative or total return.

Commingled vehicles

Source: BlackRock. For illustrative purpose only.

Meet our team

The GTAA team includes 14 individuals based in New York, San Francisco and Hong Kong, allowing the team to tap into BlackRock’s expertise across asset classes and geographiesGTAA takes a team approach to portfolio management, making investment decisions during a daily portfolio meeting where the portfolio managers discuss the latest market developments, macro insights and market pricing.

Understanding the ‘What’s Priced?’ framework

The What’s Priced framework is a key measure of macroeconomic mispricing, quantifying the disconnect between market prices and macroeconomic fundaments.

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GTAA: An overlooked driver of performance

We explore the uncorrelated return profile and application of alternative data in our GTAA investment framework.

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