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David Loutonis a professor of finance at Bryant University, where he teaches courses in investments and corporate finance. He holds a PhD from Michigan State University. His research interests are in portfolio management, mutual funds and options markets. Joseph McCarthyis a professor of finance at Bryant University, where he teaches courses in financial forecasting, derivative securities and corporate finance. He holds a doctorate in business administration from the University of Colorado. His primary research interests are in fixed income portfolio management and forecasting macroeconomic and financial time series.Stephen Rush has worked as a securities analyst and is currently a PhD candidate at the University of Connecticut. He holds a CFA charter as well as MBA and MSF degrees from Boston College. His primary research interests are in market microstructure.Hakan Saraoglu is a professor of finance at Bryant University, where he teaches international financial management, international investments and corporate finance. He holds a PhD from Michigan State University. His research interests are in portfolio management, mutual funds, options markets, international finance and financial modeling. ABSTRACT Following the recession in the early 2000s, US corporate and public defined benefit (DB) plans faced unprecedented uncertainty with respect to their funding requirements going forward. Just as capital market performance started helping plan sponsors improve the health of their DB plans, the financial crisis of 2007-2009 delivered another serious blow. Consequently, plan sponsors turned their focus on improving their risk management practices and determining whether asset managers with proven track records should be given more broadly defined mandates, specifically designed to allow for more effective navigation in more volatile markets. Tactical asset allocation (TAA) strategies seek to add value by deviating from a plan's policy mix based on the manager's view on the attractiveness of various asset classes, regions and sectors within the investment opportunity set. Although TAA can add value to a portfolio, manager skill and risk taking are required to achieve reasonable risk-adjusted performance. The timing and magnitude of shifts from the policy mix can have a significant impact on the portfolio outcomes. Therefore, it is essential for investors to assess the appropriate role of TAA in their portfolio management process and evaluate the risk-return tradeoff of tactical deviations from policy. Our study uses a sample of Ognjen Sosa

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