We emphasize strategic diversification over tactical view-taking for two main reasons:
- Tactical timing is inherently more difficult than it seems
- Tactical tilts tend to forgo some powerful diversification benefits
In this article we illustrate and provide evidence to support these assertions. We also explore which types of tactical views are worth taking, and the conditions under which tactical decisions have a better chance of improving long-term performance.
The information contained herein is only as current as of the date indicated, and may be superseded by subsequent market events or for other reasons. The views and opinions expressed herein are those of the author and do not necessarily reflect the views of AQR Capital Management, LLC, its affiliates or its employees. This information is not intended to, and does not relate specifically to any investment strategy or product that AQR offers. It is being provided merely to provide a framework to assist in the implementation of an investor’s own analysis and an investor’s own view on the topic discussed herein. Past performance is not a guarantee of future results.