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Commentary

Can Tactical Allocation Work for You?

At the Morningstar ETF Conference, a trio of experts debated whether these strategies can work--and whether they can work for investors.

At the Morningstar ETF Conference, Morningstar's Jeff Ptak moderated the "Can Tactical Allocation Work?" panel. Panelists included Horizon Investments' Robbie Cannon, Vanguard's Fran Kinniry, and Windham Capital's Lucas Turton.

What is tactical allocation? Kinniry acknowledges that there are unlimited variations on the theme. But at the core, Kinniry defines tactical allocation as an active strategy that moves between or within high- and low-risk assets in an effort to enhance returns or mitigate risk. Turton summarizes tactical allocation as "an active investment decision that is built on the belief that there are macro inefficiencies in the market." In essence, these are "go-anywhere" strategies that "go" where management feels it can minimize risk, enhance return, or both.