Compared with the strategic asset allocation process, tactical asset allocation strategy needs to re-predict the expected returns of different asset categories according to the actual situation when dynamically adjusting the asset allocation state, but it does not estimate whether investors' preferences and risk tolerance have changed again.
In terms of risk tolerance, tactical asset allocation assumes that investors' risk tolerance does not change with the changes of the market and their own assets and liabilities. This kind of investor will invest more in risky assets than strategic investors under the condition of high risk return rate, so in the long run, he will get richer investment return. The risk-return characteristics of tactical asset allocation are closely related to the asset manager's ability to grasp the changes of asset category returns. If asset managers can accurately predict the changing trend of asset returns and take timely and effective actions, the use of strategic asset allocation will bring higher returns; However, if the asset manager can't accurately predict the trend of asset returns, or can accurately predict but can't take timely and effective actions, then the investment returns will be worse than when accurately predicting and grasping market changes, and even worse than when buying and holding an initial constant portfolio.