Tactical asset allocation

Over the last few weeks I have been thinking quite a lot about this concept of "tactical asset allocation" and specifically how it impacts me as a South African trader / investor...

So here's my issue - over the last decade it has been pretty much money for jam if you have been long SA equities. The dividends have been good, there has been capital appreciation and believe it or not, the rand has been overall a quality currency to hold these assets in.

Shock, gasp, horror - and here everybody was thinking that South Africa was heading down the drain at a rate of knots...

So it has been easy - you buy SATRIX or RAFI or you pretty much throw darts at the newspaper and provided you don't hit the Alt-X you've made a pretty decent return.

But as cliched as it may sound, the world is a very different place now...

Are you going to get away with just tracking an index over the next few years? Can you just buy SATRIX, RAFI, MSCI World etc?

I amo not that sure that you will.

Two reasons:

• Global economy is recovering - we're not in a global economic bull market - certain segments will heat up faster than others
• South Africa has (at least from an equity perspective) appeared to catch up with the rest of the world

Locally our exchange is dominated by big international heavy-weights whose markets are made in London primarily. If international investors want them to move - then they will move.

Pfizer seems to be a stock that a lot of asset managers are talking up and it will suit my example well. I want to buy Pfizer - I have two options - buy it off my own bat through an asset manager geared for the international markets or buy into a fund which is supposedly "tactical" and will look for more opportunities like this.

I don't like the fund idea so I need to fin a stockbroker who can get me into international markets and then work in my tight forex regulations. But that takes a mindshift from me - I can't just limit myself to the SA market anymore.

I need to be aware of a brewery in Zambia or a Russian oil firm or a Mexican tequila plant and that takes some doing....

Will need to think about this a bit but would welcome any thoughts on

A) Will tactical stock picks outperform index tracking?
B) How important is the international market to local investors?

Let me know.