Andrew Hallam

How Do You Protect Your Retirement Savings Now?

You’ve worked hard to build your nest egg. But COVID 19’s economic shutdown created several cracks. You could do one of several things: move your money into cash, short-term bonds, gold or inverse ETFs. The trouble is, if you sell everything now, how do you know when to jump back in? Lately, stocks have done nothing but rally and dip, rally and dip. When stocks recover for real, will you get left behind…fooled into thinking the latest rally is just another feint?

It’s tempting to think we’ll get a clear signal to buy or sell. But full-time professional traders prove that’s not the case.

Take tactical asset allocation funds, for example. These aren’t run-of-the mill mutual funds because they don’t have to stick to a specific style or allocation. If their managers believe bonds will beat stocks in a given month, they sell stocks to buy bonds. When they forecast stocks to surge, they can overweight the sector they think will soar best. It might be emerging market shares, small-cap value stocks or large-cap growth. Unlike most DIY investors, they have their fingers on the pulse of the economic beat.

Unfortunately, just like most amateur traders, they usually get force-fed chunks of humble pie. In July 2018, I wrote Why Your Investment Portfolio is like A Bar of Soap. I measured the performances of every tactical asset allocation fund (as tracked by Morningstar) with a five-year track record.

Over the five-year period ending June 13, 2018, only 8 of the 182 contenders beat a balanced index fund invested 60 percent in U.S. stocks and 40 percent in bonds. Only 13 of the 182 funds beat a globally diversified portfolio of index funds invested 40 percent in U.S. stocks, 20 percent in international stocks and 40 percent in bonds.

Only 13 of the 182 funds beat a globally diversified portfolio of index funds invested 40 percent in U.S. stocks, 20 percent in international stocks and 40 percent in bonds.


Thirteen Tactical Asset Allocation Funds Beat A Globally Diversified
Portfolio of Indexes
June 2013-June 2018

 SymbolCompound Annual Return
Diversified Portfolio of Index Funds (40% Bonds, 40% U.S. Stocks, 20% International Stocks)7.75%
Horizon Active Asset Allocation InvestorAAANX8.79%
AmericaFirst Tactical Alpha IABRWX8.32%
Astor Sector Allocation AASPGX8.24%
Cavalier Growth Opportunities CCATDX10.03%
Cavalier Growth Opportunities InstlCATEX11.01%
AdvisorOne CLS Shelter NCLSHX10.05%
Cavalier Tactical Rotation InstitutionalCTROX8.58%
Arrow DWA Tactical InstitutionalDWTNX7.84%
Stadion Tactical Growth AETFAX8.55%
Stadion Tactical Growth IETFOX8.81%
Meeder Muirfield RetailFLMFX10.04%
Matisse Discounted Cl-End Fd Strat InstlMDCEX7.83%
FundX Conservative UpgraderRELAX7.87%



You might wonder how these tactical traders performed since I published these results. From June 2018 to December 31, 2018, these money managers would have been busy. U.S. stocks dropped about 7.60 percent. During the same time period, international stocks dropped about 13.08 percent. If they could have foreseen these drops, they would have traded into (what they thought might be) safer stocks, bonds or cash.

Then, from December 31, 2018 to December 31, 2019, U.S. and international stocks recovered, gaining about 30.65 percent and 21.43 percent respectively. But did these traders see that coming and pile into stocks before the rise?

By January 2020, stories of the Coronavirus surfaced. From January 1, 2020 to March 31, 2020, U.S. and international stocks dropped about 20.89 percent and 24.33 percent respectively. Did these traders see that coming and jump into bonds or cash before the markets fell?

You be the judge.

Below, I’ve listed those 13 winning funds and their performances from June 2018 to March 31, 2020. They faced a period of falling stocks, rising stocks, then falling stocks again.

Notice their results compared to a portfolio comprising 40 percent U.S. stocks, 20 percent international stocks and 40 U.S. bonds.


Tactical Trading Doesn’t Work
13 Previously Winning Tactical Asset Allocation Funds
June 2018 – March 31, 2020

 SymbolCompound Annual Return$10,000 Would Be Worth…
Diversified Portfolio of Index Funds (40% Bonds, 40% U.S. Stocks, 20% International Stocks)+0.21%$10,039
Horizon Active Asset Allocation InvestorAAANX-9.51%$8,326
AmericaFirst Tactical Alpha IABRWX-5.84%$8,956
Astor Sector Allocation AASPGX-5.08%$9,088
Cavalier Growth Opportunities CCATDX-5.64%$8,991
Cavalier Growth Opportunities InstlCATEX-4.69%$9,157
AdvisorOne CLS Shelter NCLSHX-5.71%$8,978
Cavalier Tactical Rotation InstitutionalCTROX-8.85%$8,438
Arrow DWA Tactical InstitutionalDWTNX-10.38%$8,180
Stadion Tactical Growth AETFAX-2.72%$9,507
Stadion Tactical Growth IETFOX-2.46%$9,553
Meeder Muirfield RetailFLMFX-6.50%$8,841
Matisse Discounted Cl-End Fd Strat InstlMDCEX-15.67%$7,316
FundX Conservative UpgraderRELAX-1.72%$9,687



Some might argue that these tactical asset allocation funds charged high fees…and that's why they lost. According to Morningstar, their expense ratio costs averaged 1.73 percent per year. But add that percentage back to the funds' performances and you'll find these fund managers could have worked for free- and they still would have lost to a globally diversified portfolio of low-cost index funds.

It’s tempting to think we can consistently trade our way to wins. It’s also tempting to think we can find a guide with a crystal ball that works. But no such guru or crystal ball exists. If anyone says otherwise, don’t just walk away. Run far away, instead.


Andrew Hallam is a Digital Nomad. He’s the author of the bestseller, Millionaire Teacher and Millionaire Expat: How To Build Wealth Living Overseas

Swissquote Bank Europe S.A. accepts no responsibility for the content of this report and makes no warranty as to its accuracy of completeness. This report is not intended to be financial advice, or a recommendation for any investment or investment strategy. The information is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Opinions expressed are those of the author, not Swissquote Bank Europe and Swissquote Bank Europe accepts no liability for any loss caused by the use of this information. This report contains information produced by a third party that has been remunerated by Swissquote Bank Europe.

Please note the value of investments can go down as well as up, and you may not get back all the money that you invest. Past performance is no guarantee of future results.

Des questions ?
Nous sommes là pour vous aider.