TAC vs TOC Which Is More Reliable?

Tactical Asset Allocation (TAC) and Traditional Asset Allocation (TOC) are two distinct approaches to constructing investment portfolios. TAC involves active management of asset classes based on short-term market trends, while TOC focuses on long-term strategic allocation based on risk tolerance and investment goals. TAC seeks to capitalize on market inefficiencies and exploit short-term opportunities, while TOC aims to build a diversified, long-term portfolio that can withstand market fluctuations. Both strategies have their own advantages and drawbacks, and the choice between TAC and TOC ultimately depends on an investor's risk appetite and investment objectives.

TAC or TOC?

When comparing TAC and TOC, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between TAC and TOC.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. TAC has a dividend yield of 2.49%, while TOC has a dividend yield of 1.52%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. TAC reports a 5-year dividend growth of -3.04% year and a payout ratio of 0.00%. On the other hand, TOC reports a 5-year dividend growth of 2.13% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with TAC P/E ratio at 19.79 and TOC's P/E ratio at 9.31. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. TAC P/B ratio is 0.57 while TOC's P/B ratio is 0.61.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, TAC has seen a 5-year revenue growth of -0.05%, while TOC's is -0.19%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with TAC's ROE at 3.06% and TOC's ROE at 6.50%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are ¥198.00 for TAC and ¥653.00 for TOC. Over the past year, TAC's prices ranged from ¥155.00 to ¥269.00, with a yearly change of 73.55%. TOC's prices fluctuated between ¥561.00 and ¥858.00, with a yearly change of 52.94%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.