Our approach to asset management is called Fusion Analysis and combines three methodologies: fundamental research, technical research, and behavioral science. We continually strive to balance investors’ desires for growth with the need to minimize risk and reduce volatility. We believe it’s more important to avoid the big dips than chase the high flyers.
Studies show approximately 80% of portfolio returns are derived from the asset class and sector selection, while only 20% of returns come from individual product selection. At Csenge Advisory Group, we are mindful of this 100% of the time. The more we analyze asset classes and subsectors, the more optimal risk-adjusted returns can be generated for your portfolio.
Our investment process is sometimes referred to as tactical. Tactical investing is a type of investment strategy that involves actively adjusting the asset allocation of a portfolio in response to changing market conditions.
Unlike traditional buy-and-hold investment strategies, which aim to maintain a fixed asset allocation over a long period of time, tactical investment portfolios seek to capitalize on short-term market opportunities and minimize risk by adjusting the mix of assets in the portfolio. The goal of tactical investing is to actively manage the portfolio in a way that takes advantage of market trends, economic conditions, and other factors that can impact the performance of different asset classes.
There are several benefits to using a tactical investment strategy:
- Potential to generate higher returns: By actively adjusting the asset allocation of the portfolio, tactical investors can potentially capitalize on market trends and generate higher returns than a buy-and-hold strategy.
- Risk management: Tactical investors can also use their portfolios to manage risk by allocating assets to different asset classes depending on the level of risk in the market. For example, during times of high market volatility, tactical investors may allocate more assets to defensive sectors such as utilities or consumer staples, which are less sensitive to market movements.
- Tax efficiency: Tactical investors can also use their portfolio to manage tax liability by selling losing positions and buying new ones to realize tax losses, or by holding assets in a tax-advantaged account such as a 401(k) or IRA.
In conclusion, tactical investment portfolios are a type of investment strategy that involves actively adjusting the asset allocation of a portfolio in response to changing market conditions. While tactical investing can offer the potential for higher returns and better risk management, it also comes with the added cost of active management and the risk of not correctly predicting market trends. As with any investment strategy, it’s important to carefully consider your financial goals and risk tolerance before deciding if tactical investing is right for you.