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Value Added & Tactical Asset Allocation

categories: Investing (Investment Management), RMA, Multi-Asset Class, Research Paper, GRINOLD Richard, general

A proponent of tactical asset allocation claims that a good tactical asset allocator is more valuable than an equally good equity or bond manager. After all, the tactical asset allocator  influences more assets. This assertion raises two interesting questions. What do we mean when we say an allocator or a manager is "good?" And how is value added related to assets under management? (Or, if we want to reverse causality, "How should assets under management be related to the ability to add value?")