View more on these topics

‘Static’ asset allocations outperform costly tactical strategies

Funds with a static asset allocation have delivered higher returns than other types of strategy over the past four years, research has found.

A study conducted by Aegon and shared with Money Marketing shows funds that did not make market calls and cost less have performed better than more expensive funds, which followed a tactical or strategic asset allocation.

Aegon looked at data from Morningstar on 23 funds, and five simulated static allocation portfolios with returns after an average 0.22 per cent charge. The firm compared average returns with those of its Balanced Plus Core Portfolio, which follows a strategic asset allocation, and 16 tactically allocated funds.

For a mid-risk fund, the analysis shows that, between 2013 and 2017, a static asset allocation delivered an average return of 11.7 per cent, outperforming 9.6 per cent for a strategic allocation and 8.2 per cent for a tactical asset allocation. This means funds that applied a tactical allocation, which usually changed daily, weekly or quarterly and cost from 0.45 per cent to 0.70 per cent, have underperformed cheaper and less active funds.

Graham Bentley: The many problems with asset allocation models

Aegon investment director Nick Dixon says: “In recent years markets have been on a strong upward trend and managers who have attempted to identify areas of outperformance through short-term changes have fared less well than funds that take a static approach or those who imp-lement strategic changes based on long-term expectations.”

However, while the findings cover a period of bull market, Aegon warns that strategic asset allocation is more suitable in turbulent market times.



How much are advisers charging for pension transfers?

Defined benefit pension transfer charges are being put under the microscope again as the regulator turns over more potential conflicts of interest. With the British Steel Pension Scheme the latest to dominate headlines and the FCA ready to interrogate further as it extends its review to include all firms authorised to give pension transfer advice, […]

Unfinished business?

Pension specialist Fiona Tait gives an update on three big announcements from the 2016 Budget – Pensions Advice Allowance (PAA), the Lifetime ISA (LISA) and the pension dashboard. £500 Pensions Advice Allowance What’s new Under current rules it is possible to deduct an adviser charge from a defined contribution pension fund to pay for financial […]


News and expert analysis straight to your inbox

Sign up


There are 4 comments at the moment, we would love to hear your opinion too.

  1. Aegon say: “However, while the findings cover a period of bull market, Aegon warns that strategic asset allocation is more suitable in turbulent market times”.

    Funny, I have not seen any proof of this. Mind you, only being doing the job 31 years so maybe I missed something? Maybe markets were not turbulent enough?

  2. @Iain Wishart
    I too have missed the proof over the same period.

    What I find difficult to understand or accept is that the tactical fund managers can tell ‘the future’ in more turbulent times and then seem to lose the advantage in a strong bull market. Surely if you can tell the future, then you can tell the future and the market conditions should not make a huge difference.

  3. This is a bull market story, what relevance does it have towards the end of one of the longest bull markets in history?

Leave a comment