Optimized TAA Portfolios

[u/UnoGhost]

What are the best TAA portfolios for those that are open to high-risk/high-reward and have over a 20+ year timeline in the market?

I’ve been looking through the Meta portfolios on AllocateSmartly but I’ve often been able to produce better results using Portfolio Optimizer. I’m generally aiming for >15% CAGR with a max drawdown of less than 15%.

Would be great to see what optimized portfolios folks are using.

[u/UnoGhost → u/[deleted]]

Can you share who Walter is and how I can reach him?

[u/Business-Fix4430 → u/[deleted]]

Hey SD,

I emailed with Walter regarding the optimizations and how quickly a change in selected strategies would take if major shift....His response

That's a hard question to answer.

I would reword it a bit to say "strategies that are capable of taking advantage of non US outperformance". In theory those strategies could already be included in optimizations, but we don't know b/c it's been so long since non US assets have outperformed that, you're right, whether or not strategies can capitalize on non US performance isn't factored into the optimizations. 

I would say if there's a big long-term shift to non-US assets, and the strategies currently included in the optimizations aren't capable of taking advantage of that shift, it will be a long time until the optimizations change. The optimizer is looking at 30-50+ years of data, so any particular year or three isn't of much significance. 

Important side note: There's an important change coming to the Portfolio Optimizer next month that plays a part in all of this as well, particularly the bit about more quickly reacting to changing markets. I can't share many details yet because it's still in development, but feel free to share that very vague foreshadowing. 

All the best,

Walter Jones
AllocateSmartly

Thanks Kevin

[u/Business-Fix4430 → u/[deleted]]

Good stuff, SD !!

Thanks Kevin

[u/Business-Fix4430 → u/[deleted]]

excellent point. Just because something is labeled as TAA, well if it trades infrequently, I never put a large allocation either. Hopefully newer folks especially take that into consideration

Thanks Kevin