Tactical and Dynamic Asset Allocation

Top-down market drivers have become ever more important to asset allocators and investment managers in general. This intensive 2-day programme digs deeply into which macro drivers are relevant, how they change over the business cycle and how monetary policy impacts market performance.

It gives delegates the tools to develop an integrated top-down view, determine the investment climate and make decisions about tactical asset allocation and style and sector choices. Emphasis is on developing hands-on skills and confidence and workshops of relevance to the current scenario are used extensively throughout the course.

The course is relevant for anyone involved in making portfolio decisions, analysing financial markets, and delivering investment advice. In particular:

• Chief Investment Officers
• Portfolio managers
• Investment strategists
• Wealth managers
• Macro hedge fund managers
• Traders

Practical experience in capital markets and familiarity with the main financial instruments is assumed. Some basic knowledge of macroeconomics and statistical methods is useful, but the course leader will always be available to clarify doubts.

Section I – Motivation for the Tactical Approach

• The limits of diversification
• Risk management vs. market timing
• Stock picking vs. index investing
• Micro vs. macro efficiency
• Trends in asset management

Section II - Macro Sensitivities of the Major Asset Classes

• Growth
• Inflation
• Combinations of growth and inflation
• The macro drivers of the stock-bond correlation

Section III - Gauging the Business Cycle

• Classical business cycle analysis
• The growth-cycle approach
• The output gap and its estimation
• Proxies for the output gap
• Separating secular trends from cycles

Section IV - The Importance of Monetary Policy

• Monetary policy objectives
• The modern central bank toolbox
• Yield curve dynamics
• Equity valuation
• Corporate bond spreads

Workshop: Taper tantrums

Section V - Asset Class Performance over the Cycle

• A four phases framework
• Characteristics of each phase
• Transitions to a new phase
• The modifying impact of monetary policy
• Asset class performance in each phase

Workshop: Where in the cycle are we now?

Section I - Building an Integrated Macro View

• Growth and inflation: putting the pieces together
• Reducing the number of variables: timely proxies
• Leading indicators
• Nowcasting
• Creating a macro-dashboard for TAA

Section II - Recessions and Exogenous Shocks

• What causes recessions?
• Do we have any chance of predicting recessions?
• The policy response
• Asset class behaviour during recessions

Workshop: How Covid-19 upended everything – momentarily

Section III - Dynamic Asset Allocation

• The importance of the time horizon
• Looking for relevant drivers of risk and return
• Modelling the drivers to create relative scores
• Back testing
• Defining the investment climate

Section IV - Beyond Asset Classes

• Should equity style factors be timed?
• Equity style performance over the business cycle
• Value vs. growth and the yield curve
• Equity sector performance and the business cycle
• Equity styles and sector exposure internationally

Workshop: Analysing the current scenario