Retirement plan fiduciaries have increasingly turned to tactical asset allocation strategies in hopes of better results.
The trend began with the financial crisis of 2008, when buy-and-hold strategies failed to deliver. Since then, concerns over monetary policy and asset class repricing, equity valuations, rising interest rates and a better understanding of participant risk tolerance have boosted interest in TAA.
Instead of taking a passive approach, TAA-managed funds promote themselves as offering a "dynamic" approach that adjusts portfolio allocations based on market conditions. Many 401(k) plans include target-date fund or target-risk investment options in their mix that use a TAA strategy of some kind.
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