Tactical Allocation

The difficulty of predicting market cycles highlights the importance of preparation and flexibility to help protect assets in bear markets while also being ready to participate when markets again turn favorable.

The VanEck Approach

Tactical market participation as well as effective risk mitigation can be implemented in investors’ portfolios through strategies that offer a robust, rules-based, data-driven investment process for asset allocation decisions.

  • Using macroeconomic, fundamental and technical indicators developed with Ned Davis Research, the Managed Allocation Strategy is a tactical allocation strategy that invests in global stocks and U.S. fixed income. The Strategy can raise significant cash during extreme market events.
  • The Municipal Allocation Strategy uses a proprietary model that uses various objective, data-driven indicators in an attempt to identify periods of heightened credit and/or duration risks. The strategy seeks tax-exempt income and enhanced risk-adjusted total return by allocating among selected VanEck municipal bond ETFs.

Why Now

  1. The current market environment is unique in basically every way possible with the simultaneous battle of both a health crisis and a financial crisis. This caused the fastest major market decline, from peak-to-trough, in the history of the U.S. stock market and emphasizes a portfolio that can enact defensive positioning in safe assets.
  2. Uncertainty and risk in the markets are pervasive and impacting all asset classes. A comprehensive model, designed with specific market drivers for each asset class and with the ability to rely on various types of research—including macroeconomic, fundamental, technical, and sentiment data—provides a more thorough analysis.
  3. History has proven that when emotions are heightened and investor psychology is bruised, investment decisions suffer. Investors tend to make the wrong decision at precisely the wrong time, including staying invested too long and participating in a drawdown or not reallocating and missing the markets recovery. An objective approach that removes human behavioral factors can eliminate these types of errors.

Continuing our pursuit of forward-looking strategies, we identified a need for asset allocation strategies that adapt across market conditions,

Designed to participate meaningfully in bull markets and to de-risk in bear markets, our Guided Allocation strategies share common attributes, including objective, rules-based approaches, the ability to position defensively in times of market stress, and the use of liquid, cost-effective ETFs for broad, efficient exposures.