Frequently Asked Questions
Got Questions About Investing? We Have Answers.
COMPANY INFORMATION
What is Tactive?
Tactive is an SEC Registered Investment Advisor (RIA) with an award-winning WealthTech platform using tactical, active, blended-model strategies. After answering a few questions about your financial goals and risk comfort level, you can select your strategy, fund your account, and have Tactive automatically trade it for you.
Is Tactive a fiduciary?
In Latin, the root word “fīdere” means to trust. Tactive’s number one core value is “Fiduciary Powered.” What that means for our team is that we don’t take our clients’ confidence in us for granted. Our investment strategies focus on giving our clients the best opportunity to help meet their financial goals within their comfort level.
HOW TACTIVE WORKS
What is tactical investing?
Tactical investing is a proactive approach. Unlike passive investors, who rely on historical market trends to eventually turn portfolios around, tactical investors read the current market conditions and make adjustments in real-time to prevent drawdown. This approach can help to mitigate investor losses and optimize for higher overall returns.
What is "Drawdown" and what is Tactive’s philosophy on it?
Drawdown is a peak-to-trough metric of downside volatility in an asset. It is measured by the decline in value from its previous high to the subsequent confirmed low. It is typically quoted as a percentage. (i.e., the strategy has a -13% drawdown).
Tactive has an obsession with minimizing drawdown to reduce the time it takes to recover from a pullback period. One way it does this is through active investing. In addition, Tactive believes that multi-strategist models are key for optimal diversification and minimizing drawdown.
What is the difference between Active and Passive Investing?
Active investing attempts to move in and out of the market to minimize market losses and maximize profits. Passive is a buy-and-hold strategy to reduce trading and other costs.
Is Active investing a fancy way of saying you are using a rebalancing strategy?
Rebalancing is a model-based strategy that keeps the allocation mix in a portfolio constant. For instance, in a 60/40 model, the portfolio will always be 60% stocks and 40% bonds. The assumption is that this mix will produce a certain return over time. The portfolio is rebalanced periodically to maintain that mix.
Unlike rebalancing, Tactive uses an active investment strategy. The goal is to invest in assets that will produce immediate returns, regardless of asset class, and sell only to reduce drawdown when the market backslides. Active investors trade more frequently than passive investors who use an automated rebalancing strategy.
If being tactical and active is so good, why doesn’t everybody do it?
In recent years, the wealth management industry has heavily relied on algorithmic rebalancing and third-party money managers. In other words, they’re not making the investment decisions; a computer is doing it for them. Tactical and active investors need the knowledge, tools, and time to analyze the market in real-time. The number of firms that do that is growing smaller every year.
Does Tactive use Modern Portfolio Theory?
No. Modern portfolio theory is too rigid for a tactical trader. It operates under the outdated hypothesis that portfolios with a certain allocation mix will generate a specific return over a number of years. That “blanket” investment approach doesn’t work in the post-pandemic world. Tactive believes in being proactive, adjusting to market changes as they happen, and maximizing returns.
What is WealthTech?
WealthTech refers to using cutting-edge technologies to provide alternatives to traditional wealth management firms.
Is there a way to make money when the market is down?
Yes. One way this is accomplished is by moving assets to cash during pullback periods to preserve its value. In addition, there may be times when strategists use inverse strategies that look to profit when the market is going down.
Is Tactive trying to time the market? Almost everything I read is that trying to time the market does not work.
Tactive uses advanced algorithms and quantitative analysis to preserve capital or maximize gains. Our methodology is rules-based and doesn’t necessarily correlate with the market.
Markets move in cycles, and unlike a buy and hold strategy that will ride the ups and downs, the financial strategists we work with identify patterns that indicate that the market has the potential to break down. When this happens, we take a defensive position and move into less risky assets, including cash.
There will be times when your account could be almost entirely in cash, and the market could go up, or you could be entirely invested as the market is going down. In both cases, however, we take emotion out of the equation and invest according to the strategy.
If the best performance days typically occur during down markets, what’s the impact of missing the biggest gain days?
“Down markets” is a general term that describes how the market is doing on average. That doesn’t mean that certain investments aren’t performing well.
Tactical investing means selling the “dogs” and investing in securities and funds that will earn the investor a return right away, as opposed to waiting for the market to turn and hitting that unlikely “home run” ball.
FINANCIAL STRATEGISTS
What is a financial strategist?
Strategists are typically highly skilled in identifying mathematical patterns in the market. Based on their findings, they use these patterns to create rules that generate signals when to buy and sell various crypto and traditional assets. We call these “Models.” Each strategist has a different methodology to create their model.
How do you select your strategists?
At Tactive, we take great care in making sure that the Strategists we work with align with our core values.
In addition, they meet the following criteria:
- Use Active Models
- Focus on Minimizing Drawdown
- 5-Year+ Track Record
- Consistent Model Performance
- Returns Align with What is Being Published
- Compliments Other Tactive Models
GETTING STARTED
What is the minimum investment?
A minimum of $5000 is recommended.
For clients who wish to work with a Wealth Advisor, the recommended minimum is $50,000.
How do I fund my account?
There are a number of ways you can fund your account, including:
Bank Wire – Fastest – Trade as quickly as one business day or less, determined by your bank.
Online Bill Pay – Fast – Trade in one to six business days, determined by your bank.
Connect Your Bank via ACH – Slow – Trade after four business days.
Mail a Check – Slow – Trade six business days after your check arrives at IBKR.
Transfer Assets –
ACATS (Automated Customer Account Transfer Service)
Transfer Shares Held at Transfer Agent
Transfer Employee Stock Options or Share Plan Assets
Free of Payment Transfer of US Securities
Instructions are available on the platform or through your Wealth Advisor
What are the fees?
Tactive charges a fee of .65% annually to use the platform. As an example, if you were to invest $10,000 on the Tactive platform, the fee for the year would be $65. If your account grew to $100,000, the fee would be $650 for the year. The platform fees are automatically withdrawn from your account monthly. You will see a line item on your statement that shows these fees.
Tactive works to keep clients’ costs as low as possible within your investment by using stocks with no trading fees and low-cost Exchange Traded Funds (ETFs) or Mutual Funds. These associated fees are charged monthly, and you can see them on your statement.
How often are investments in my account traded?
Most trades are made at the end of the month; however, a strategist may have a signal that occurs due to market conditions. When this happens, there may be trades that are made intramonth.
Can I pick a stock that I really like? We believe in blending strategies for optimal diversification; however, if you work with one of our wealth advisors, you can make your own stock selections.
Can I get an alert whenever trades are executed?
Yes, you will receive an email confirmation for any trades, and you can also log into your account to see the activity.
Does all the trading drive costs up?
The number of trades does not increase fees in your account. Please see our fee structure.
Do you use pay for order flow?
No. We do not believe receiving revenue from institutions is in our clients’ best interest. The client would get poorer executions, an unseen fee, and drag on returns.
What is my tax cost for the Short-Term Capital Gains created with active trading?
Tactive recommends speaking with your tax consultant and Wealth Advisor before making investment decisions.
Active investing can trigger a short-term taxable event on capital gains like ordinary income unless the account is a qualified Account like an IRA, which is tax deferred.
How much is lost to trades, taxes, and fees for being active?
Trading fees are minimal, and tax liabilities can be offset by tax loss harvesting at the end of the year. This is part of our tactical investment strategy at Tactive. It’s also important to note that minimizing drawdown involves the selling of assets that are showing a loss. That creates a tax benefit, not a liability. Speak with your accountant to learn more.
WEALTH ADVISORS
I already have an advisor, can I still use this platform?
Absolutely! You can choose whether to invest on your own through the platform or work with your advisor. Your choice. If you like, please introduce us to your advisor. We are excited to introduce more advisors to the platform and educate them on the benefits of tactical investment strategies.
When I set up an account, where is my investment kept?
For self-managed portfolios, Tactive uses Interactive Brokers LLC as the custodian. Interactive Brokers was founded in 1978 and operates the largest electronic trading platform in the U.S. by number of daily average revenue trades. It is publicly traded on the Nasdaq as IBKR. While Tactive provides Interactive Brokers the buy and sell signals for your account based on your goals and the strategy you selected, your investment is maintained by Interactive Brokers.
For clients working directly with Tactive Wealth Advisors, many custodians are available, including Interactive Brokers, Charles Schwab, TD Ameritrade, and more. Your advisor will work with you to determine the optimal custodian or brokerage bank for your needs.
