Broker Check

Tactical Asset Management

Tactical strategies seek to actively allocate assets based on a mathematical ranking process to help identify market sectors with the greatest upside potential. This is a powerful risk management tool because it seeks the most productive sectors of the market helping minimize the effects of market corrections by either moving to cash or more defensive asset classes. By using mathematical data, buy and sell decisions can be based on logic rather than emotions. Quantitative data of individual investment options, such as fund price or performance of the underlying investments within it, can be accessed and analyzed by technology. With this data, a recommendation can be formed that is tied to the statistical probability of a specific investment ascending or descending over a defined period of time.

J M Brown Financial Partners may employ several different tactical strategies including algorithm based portfolios, known as Price Trend Portfolios or PTP. The PTP portfolios will ideally have 11 different models each representing a different position within the portfolio. Each model has a unique calibration to optimize the analysis periods of the funds representing different asset classes that it can select. Each model has its own optimized sell discipline.

Other tactical strategies seek to identify short-term periods during a year that have historically had a high probability for market appreciation. These portfolios will only be invested in the market for short periods totaling approximately 75 days and otherwise remain in a money market fund or similar cash equivalent investment. The actual mutual funds representing different asset classes will be determined based on the best performing asset class at the time the position is established.

A third tactical strategy seeks to identify sectors of strength in the market. At the beginning of each quarter, an analysis of the markets on a quarterly risk measurement determines whether to invest in either Equities or Bonds/Cash during the quarter. Based on the outcome of this risk measurement, the model will select the highest ranking sectors in the market. When invested in equities a reallocation is made on a monthly basis. On the other hand, when the model is invested in the fixed income/cash sector a reallocation is only made quarterly.

 

Strategic Asset Management

Strategic asset allocations are based on modern portfolio theory. This is more of what is commonly referred to as a buy and hold strategy. Often these allocations are re-balanced on a quarterly basis. These portfolios are designed based on a client’s risk tolerance. A client’s risk tolerance will not only determine the allocations to fixed income and equities but also the types of equities/fixed income funds used to construct a portfolio.