For example, many systematic TAA strategies try to use quantitative trend following or relative strength techniques to produce excess returns (alpha).
The efficient-market hypothesis would imply that tactical asset allocation cannot increase risk-adjusted returns, since markets are already efficiently priced.
The investor needs to have the necessary knowledge, practical investment skills, dedication, and discipline to design and/or execute a successful tactical strategy.
Investors who utilize the tactical asset allocation strategy generally want to hedge risk in a volatile market.
[2][3] In a study conducted by Morningstar, Inc., they examined the "net annualized return, standard deviation, Sharpe ratio, and maximum drawdown from July 31, 2010, to December 31, 2011" of 163 tactical funds.