YTD: -10.3%
Performance YTD result is an estimated percentage based on a model account and may not be performance of your account.
As Of: 04/30/2020
Market Exposure
  • Dividend Equities
  • Fixed Income
  • Alternatives
  • Cash Equivalents
Tactical Income
Strategy Overview:

Tactical Income is a fully tactical investment strategy designed to produce income while managing principal risk. The strategy invests in a diversified basket of global iShares® ETFs across the income spectrum using U.S. Bonds, International Bonds, Corporate Bonds, Mortgages, and U.S. and International Dividend Equities. The strategy seeks a target yield of inflation +2-3%, protection against rising interest rates & inflation with real assets, potential for appreciation through growth assets, and downside protection through a tactical allocation to yield sources with diversification benefits. 


  • Income Generation

  • Downside Risk Protection

Date Update
September 20, 2019

Preferred Stock (PFF) and Global Infrastructure (IGF) exposure increased in the Tactical Income portfolio in Q3. What are you seeing that you like from those two ETFs?

Our target investment level is more bullish. At the same time, our duration model is looking for holdings that are more exposed to credit risk and beta, keeping duration low and generating enough yield. Therefore we increased exposure in the hybrid asset class. Since both PFF and IGF have negative duration, adding the positions led to lower duration exposure for the portfolio. PFF and IGF have outperformed many fixed-income ETFs this year, returning 13.1% and 19.5% YTD, respectively.


July 1, 2019

"NorthCoast Asset Management ETF portfolios again caught the large-cap rally in Q2 from a commitment to U.S. stocks. The firm made minor adjustments to its portfolios, but maintained large-cap and midcap ETFs among its top holdings with a cautiously bullish outlook. NorthCoast remained upbeat on bets in Pacific region and emerging market ETFs....." Read the full article by clicking the link below. 

Investing For Retirement: Large-Cap Rally Fuels Gains for NorthCoast ETF Portfolios

March 29, 2019

"Betting on U.S. equities paid off for NorthCoast Asset Management in Q1. After fading late in 2018, top holdings of the firm's ETF retirement portfolios have come roaring out of the blocks this year. NorthCoast took a slightly more conservative allocation as the quarter came to a close, but still has a favorable outlook for ETFs focused in select international markets. Here are some highlights from Q1...." Read the full article by clicking the link below. 

Investing For Retirement: NorthCoast Asset Management Captures Rally In Q1

December 31, 2019

Earlier this month, our ETF-managed portfolios were highlighted in the Investor's Business Daily. 

"NorthCoast Asset Management recalibrated the holdings of its ETF portfolios in Q4 as market turbulence kicked up. The firm added short-term Treasury ETFs and cut back on its exposure to Europe to weather the storm. It also saw sell-offs as buying opportunities. Here are highlights for the portfolios during the quarter..." Read the full article by clicking the link below. 

Investing For Retirement: NorthCoast Asset Management Shifted To Short-Term Treasury ETFs In Q4

December 30, 2018

What do you make of the recent volatility in the market and how has it, or hasn’t it, impacted your outlook and investment decisions for the portfolios?

The recent volatility has not significantly impacted our outlook as our model has been indicating that the fundamentals of the U.S. economy are still relatively sound. As a result, the market volatility has served as an opportunity to tactically add some U.S. equity exposure at lower prices. We see this volatility as a reaction to uncertainty. However, the uncertainty has not materialized into impactful changes to fundamentals.


December 30, 2018

How has the Fed’s moves and/or intentions on interest rates shaped your holdings in Tactical Income?

We believe that the odds remain high that there will be two additional rate hikes in the first half of 2019. We expect these hikes to increase the volatility of equity and real estate prices as well as an uptick in corporate bond spreads and mortgage spreads. Our proprietary Duration Timing model has provided us with tools to actively manage interest rate risk. This model has indicated to increase duration in the tactical income portfolio by trimming iShares Interest Rate Hedged Long-Term Corporate Bond ETF (IGBH) and adding longer duration exposure with ETFs such as iShares 20+ Year Treasury Bond ETF (TLT).


September 30, 2018

An interest rate hedged high yield bond ETF HYGH was added to the Tactical Income strategy during Q3. What factors led to this buy?

Our newly developed proprietary duration timing Model has provided us with a new tool for quantitative and rule-based management of interest rate risk. The model has indicated a relatively short-targeted duration, which led us to decrease the portfolio’s duration. We trimmed duration by decreasing the allocation to HYG and then adding HYGH, the interest rate hedged version of HYG. HYGH maintains exposure to high-yield bonds while lowering overall interest rate risk through a hedging mechanism.

September 26, 2018

With the announcement by the Federal Reserve concerning interest rates, we published a few thoughts about Tactical Income and its ability to mitigate interest rate risk.

Click the link below to read the publication:

Rising Interest Rates & Tactical Income, 9/24/2018

August 8, 2018

iShares Intermediate-Term Corporate Bond ETF completed a 2-for-1 stock split yesterday that will lower the share price but increase the total number of outstanding shares. For each share of IGIB held, investors will be receiving 1 additional share. The corporate action is being processed intraday 8/8/2018 by most custodians and will be completed by 8/9/2018. The total value of shares outstanding is not affected by the split. The ETF also went through a change of ticker effective August 1, 2018. Previously CIU, the ticker is now IGIB.


Click here for additional information on the corporate action. If you have any questions, feel free to contact our advisory team.

June 29, 2018

What appeals to you about U.S. large-cap equities (IVV) heading into the second-half of the year?


The U.S. economy is still fundamentally strong with job growth accelerating since September 2017 and unemployment rates reaching new lows. Wage growth, as measured by the employment cost index for private wages, has also been rising which is generally consistent with the tightening labor market and a narrowing in the unemployment rate gap. Manufacturing has become one of the stronger components of the U.S. economy with almost all of the regional economies picking up steam in recent months. As a result of this positive economic data our market timing model shows a slightly more bullish outlook for the U.S. equity market compared with the first quarter’s outlook.

Sentiment remains optimistic as the U.S. consumer is feeling more upbeat about its current financial situation. However, the Trump administration’s formal announcement of additional tariffs on Chinese imports has raised concerns about trade tension between the two largest economies in the world. These tariffs could increase uncertainty and weigh heavily on financial market conditions and the collective sentiment.

January 19, 2018

In 2017, a risk-on apporoach to income was rewarded with positive returns. Assets that traditionally carry more downside risk, such as equities, international bonds and alternatives, contributed to a strong year for Tactical Income. The strategy returned +8.3% for the year, outperforming the general U.S. Aggregate Bond Index and slightly underperformed the more aggressive Morningstar Multi-Asset High Yield Income Index. Heading into 2018, NorthCoast maintains a bullish stance with an expectation of further increases in interest rates throughout the year.

Read the entire year-end review here.

January 3, 2018

What has been the most notable performer in 2017 in your Tactical Income portfolio, and to what do you attribute its gains?

CLY, the iShares 10+ Year Credit Bond ETF, was certainly among the top performing positions in our Tactical Income portfolio this year. The security was up 12.1% and we currently hold about a 15% position in our portfolio. With the U.S. economy remaining fundamentally strong, the default rate of corporate bonds is relatively low. Our ETF scoring model showed an attractive aggregate score for CLY throughout the year with valuations and sentiment signals being the strongest contributors.

Exposure to global infrastructure from IGF (iShares Global Infrastructure ETF) was another noteworthy holding in 2017. As investors anticipated pro-growth policies and more infrastructure spending in the U.S., IGF climbed throughout 2017, finishing the year +19%.

For more commentary from CIO Patrick Jamin on the final quarter of 2017, Click Here

October 4, 2017

What factors led to the addition of iShares International Treasury Bonds ETF (IGOV) to the Tactical Income ETF portfolio?

Three out of four sub-groups of market-moving indicators (macroeconomic, technical and sentiment) were in positive territory. We had been eyeing IGOV for some time and found a good entry point in the third quarter as its liquidity improved.

Have there been any specific concerns with intermediate credit bonds (CIU)?

The trimming of CIU was driven by our global tactical asset allocation model, which displayed a relatively low score for the position. Its macro, valuation and sentiment signals were all in negative territory.


To read more commentary, check out a recent article published in the Investor's Business daily, click here.

September 1, 2017

The Board of Trustees of iShares Trust has authorized a stock split for the iShares International Treasury Bond ETF (IGOV) for shareholders of record as of the close of business on August 28, 2017, effective after the close of trading on August 30, 2017.  Shares of the Fund will begin trading on a split-adjusted basis on August 31, 2017.The 2-for-1 split will lower the share price and increase the number of outstanding shares.

The total value of shares outstanding in your portfolio is not affected by the split. Detailed information is available on page 2 of the IGOV Summary Prospectus by clicking here. Additional information on stock splits can be found here

January 27, 2017

With a net performance of +5.9%, Tactical Income outperformed the general U.S. Aggregate Bond Index (AGG) while underperforming Morningstar’s Multi-Asset High Yield Income Index. As we head into 2017, NorthCoast maintains a cautiously bullish stance with an expectation of further increases in interest rates throughout the year.

Read the entire year-end review here.

September 1, 2016

How has the uncertainty of the pending rate hike by the Federal Reserve impacted the management of the Tactical Income strategy?

With the current available data, the probability of a rate hike in September is low. The market is currently pricing a 26% chance of a hike in September, 32% in November and 52% in December.   

The Tactical Income strategy allocation is well positioned for a possible rate hike. The portfolio has shorter duration and a higher yield compared to its benchmark of U.S. Bond Aggregate Index. We have also recently reduced our exposure to long-term treasuries position and increased our position in emerging market bonds to manage duration and yield risk. 

Exposure to high yield bonds remains one of the top holdings of the portfolio with an 11% weighting.  High yield bonds are generally less sensitive to interest rate hikes.  At the same time, we believe that U.S. economy is fundamentally strong, thus the default rate should stay low for high yield bonds.  The strategy also has decent exposure (approximately 25%) to alternative investment and dividend equity ETFs, which typically are also less sensitive to rate hikes and even perform well in interest rate rising environments.

If investing for retirement, why would CLY (iShares 10+ Year Credit Bond ETF) be a suitable holding right now?

Both domestic and international demand for investment grade corporate bonds is high.    Given the low and negative yield environment in Europe and Japan, the U.S. corporate bond market is one of the few supplies of high quality yield left in the current market. The relatively high yield of CLY (4%) can be helpful in boosting income for a retirement portfolio.

In the past month, the Tactical Income strategy shifted away from U.S short-term treasuries and into emerging market bonds. What drove this move from SHV into EMB?

EMB was displaying a positive outlook on three of the four major categories for which we evaluate ETFs; valuation, macro and technical.  The Emerging market bonds seemed to deliver relatively strong performance after the Brexit vote.  Since then, we concluded the outlook of emerging market has improved with a stabilizing Chinese economy and commodity prices.   

August 26, 2016

NorthCoast has been recognized with Top Guns status by Informa Investment Solutions' PSN manager database for the management of its separately managed account solution, Tactical Income.

Providing differentiated offerings has been the focus of our investment philosophy for almost thirty years. Our objective is to provide clients a solution that complements their portfolio and produces risk-adjusted yield in any environment." - NorthCoast President & CEO Dan Kraninger 

Read more... 

August 3, 2016

What is attractive about CLY right now?

The expectation of fewer future rate hikes makes U.S fixed income with relatively longer duration more attractive. Three out of four categories of our indicators are positive for CLY: valuation, technical and sentiment. The relatively high yield of CLY (4%) can be helpful in boosting the income for the strategy.


There has been a recent pickup of inflows into high-yield bonds. What is your sentiment towards HYG right now relative to other bond holdings in your portfolios?

We are neutral on high yield bond.  Technical indicators have decreased together with sentiment indicators for HYG recently.  The rising price of oil has contributed to the rebound of credit spread and we believe that more future appreciation of HYG will be limited.


January 20, 2016

The following report provides in-depth analysis into the successes and challenges of Tactical Income throughout 2015, important research into the mechanics of the strategy, and a brief outlook for 2016. Click here for the complete report. 

December 1, 2015

HYG (High-Yield) remained the strategy’s top holding while it added exposure to PFF (Preferred Stock). Regarding HYG, Patrick Jamin states, “historical data shows that high-yield bonds generally perform better than lower yielding bonds, such as government or credit bonds, in a rising interest rate environment.“

November 2, 2015

Conviction swayed away from emerging markets and back toward developed markets such as the U.S. in October. Tactical Income removed exposure to EMB (emerging market bonds) as macro-economic signals showed signs of deterioration in emerging markets. The available cash was put to work in U.S. fixed income positions, CIU (intermediate credit) and CLY (10+ year credit).

September 11, 2015

A 5% reduction in PFF (Preferred Stock) was replaced with a purchase of DVY (Select Dividend). Return potential is equally positive for both, however the low correlation between the positions decreases overall portfolio risk.

July 23, 2015

A 5% position increase of MBB moves Tactical Income closer to the weight of its benchmark, the Global Bond Aggregate. Signals show the sector continuing to benefit from the Federal Reserve supporting low interest rates. Prepayment risk (the risk associated with the early unscheduled return of principal on a fixed-income security) appears to be contained. The strategy also reduced 5% of its weighting in CLY to decrease duration risk of portfolio (effective duration of CLY was 12.5 as of 07/20/2015).

July 21, 2015

Seeking income in today’s environment provides opportunities and challenges. Get a better understanding of the landscape in this Rising Rate Report from NorthCoast’s Portfolio Management team.

July 1, 2015

Tactical Income reduced exposure to emerging market bonds (EMB) by 5% due to weaker macroeconomic indicators and added 5% to high-yield debt (HYG) as outlook for the U.S. economy continues to improve.

June 2, 2015

With the outlook on equities weakening, Tactical Income reduced exposure to dividend-paying equities (DVY) and preferred stock (PFF) in May. Seeking “safer” yet attractive yields in the given environment, the strategy added exposure to emerging market debt (EMB) and muni bonds (MUB).

May 20, 2015

Tactical Income reduced DVY by another 5% as our U.S. equity outlook weakened with stocks reaching an all-time high. In response, it initiated a 5% position in MUB as the yields are becoming more attractive after the bond pull-back.

May 4, 2015

Tactical Income reduced exposure to dividend equities (DVY) and re-allocated to Emerging Market Bonds (EMB) and 10+ Year Credit Bonds (CLY). EMB valuation is attractive and sentiment signals, including economic surprise index and implied volatility, are ranked near the top of our fixed income investment universe. With a current yield of 4.1%, CLY remains attractive and our valuation signals (both yield and spread compared with treasuries with similar duration) are positive.

April 15, 2015

Tactical Income was highlighted in a recent article in the Investor's Business Daily. You can read the report here ...

April 6, 2015

Tactical Income holds it current positioning (no changes in March) with the belief that the economy is improving and the default rate is likely to remain stable. HYG (High Yield Corporate) remains the top holding, as high yield bonds are generally less sensitive to interest rate hikes, which are foreseen in the future.

March 3, 2015

Tactical Income came into February with approx. 15% in cash equivalents. It was put to work by adding 10% exposure to EMB, and a 5% position to TLT in an effort to take advantage of the current fixed-income yield environment.

February 3, 2015

Macroeconomic indicators of leading business development and industrial production in emerging markets are improving. And with a relatively attractive yield in the position, the strategy added exposure with EMB.

February 2, 2015

Tactical Income continues to take advantage of the low-interest rate environment with a healthy allocation to alternative, equity, and high-yield positions. 10+ Year Credit Bond (CLY), a 10% holding in the strategy, rallied 5% with its low-default rate and attractive yield. 

January 6, 2015

Tactical Income took advantage of the Federal Reserve’s dovish outlook throughout the year and maximized exposure to higher duration and higher yield offerings which boosted performance. Positions in high-yield corporate debt, dividend equities, and real estate were a few of the top performers.

December 2, 2014

Tactical Income adjusted its holdings as the outlook favors credit bonds over municipal offerings. The strategy bought into IGF (Global Infrastructure) and REM (Real Estate) while liquidating IDV (International Select Dividend) and MUB (Municipal Bond).  Cash position was reduced to take advantage of the current yield environment. 

November 5, 2014
With the conclusion of the Fed’s QE program, interest rates remain highly sensitive. The strategy shortened its duration to protect against rising interest rates. The strategy added 10+ year credit (CLY) and short-term treasuries (SHV) ETFs while also buying Select Dividend (DVY) ETF to increase yield potential. CIU, SUB, and CSJ were removed from the strategy. 
October 1, 2014

HYG slumped 2.6% during the month, yielding 5.7%, which is about the highest yield in the past year. “This presents a good opportunity. We saw this situation a few months back when the yield was at about the same level and the ETF rebounded very nicely,” comments CIO Patrick Jamin.