Rules of the Game: Tactical Asset Allocation vs. Competition for Capital

By Aaron Filbeck, CAIA, CFA, CFP®, CIPM, FDP

Since late 2022, we’ve been actively exploring the evolution of portfolio construction through the lens of the Total Portfolio Approach (TPA)—a shift in mindset that challenges traditional asset allocation frameworks. Through two in-depth reports, Innovation Unleashed: The Rise of Total Portfolio Approach (March 2024) and From Vision to Execution: How Investors Are Operationalizing the Total Portfolio Approach (October 2025), and the launch of our dedicated TPA Hub, we’ve examined how leading institutional investors are rethinking governance, decision-making, and performance measurement. In this article, we build on that body of work by contrasting TPA’s “competition for capital” mindset with the more familiar structure of tactical asset allocation (TAA)—not to say one is better, but to show how each is a different game entirely.

As we’ve been discussing the rise of the Total Portfolio Approach, and the dimensions that are associated with it, one of the most common statements I’ve heard is some variation of the following:

“I like this concept of competition for capital, but it really just sounds like tactical asset allocation with a new name attached it.”

Chess vs. Monopoly

When it comes to portfolio design, the game you choose to play determines the rules, the scoreboard, and even the types of moves on the board that are possible.

In many ways, tactical asset allocation is a lot like playing chess: the board is fixed, the rules are strict, and the path to success (checkmate) is defined by executing within that structure. Competition for capital, on the other hand, looks more like Monopoly. The objective is clear (accumulate the most wealth), but there’s no predetermined path for how to get there. Success comes from making directional bets on properties, trading opportunistically, and deciding when to take on concentrated risk by building houses or hotels.

Monopoly can feel uncomfortable because the structure is looser and outcomes depend on both foresight and flexibility, but that very openness creates the possibility of winning by a large margin. Both games are fun, and certain types of people may gravitate towards one over the other. The same thing can be said for designing and governing a long-term pool of capital.

TAA vs. Competition for Capital

In a governance structure that elects for SAA, the rules are set forth by building a prescriptive policy portfolio that the investment team is responsible for managing around. The scoreboard is measured against that policy portfolio, and the moves available are modest, deliberate deviations to capture short- to medium-term opportunities. You may sacrifice a few pawns to distract your opponent as you plan your next move. With this framing, TAA is framed as an “alpha decision,” designed to add value while staying close to the policy guardrails. It’s quantifiable and comfortable, but doesn’t allow for much creativity.

In a governance structure that elects for TPA and, by extension, a competition for capital mindset, the rules are set forth by a very different prescription: maximize value without losing your money along the way. The scoreboard is measured against an appropriate risk and return target, often in the form of a reference portfolio. The moves available to the team are wide open, so long as they advance that objective. Instead of managing relative to asset class benchmarks, you’re asking: “What’s the best use of the next marginal dollar?” Every potential investment, from a public equity to a private infrastructure project, competes directly for a spot in the portfolio. In this framing, competition for capital is a “beta decision,” designed to improve long-term outcomes by working across the whole opportunity set.

While this opens the door to true cross-asset decision-making, it is challenging to implement if the guardrails are not established and ownership of decisions is unclear. It requires the governing body and the investment office to have clear accountabilities between who is responsible for setting the objective and who is responsible for managing the portfolio. Those who have embraced TPA tend to have clearer delineation than those who embrace SAA, which can often have CIOs implicitly being held accountable for policy portfolios set by their boards.

Shifting from TAA to C4C

Moving from TAA to competition for capital changes governance, performance measurement, and the scope of opportunities. TAA is benchmark-driven, while competition for capital is outcome-driven. TAA’s risk lens is tracking error, while TPA looks at the total portfolio’s risk-return efficiency. And while TAA tends to source ideas on an existing relative basis, competition for capital encourages a global, unconstrained search for opportunities. This can be summarized in Table 1.

Putting It All Together: Play the Game You’re Good At

While seemingly similar at face value, tactical asset allocation and competition for capital are different games entirely: one is chess, which rewards discipline within structure; the other is monopoly, which rewards creativity within less restrictive rules. The choice depends on how the organization is governed, and specifically how decision-making rights are allocated between the board and the investment office. Without clarity on who sets the objectives and who plays the moves, either game quickly devolves into confusion and frustration. With clarity, both can be effective, but the nature of the experience and the outcomes will differ significantly. These are different games, and people can excel at either one of them. But isn’t Monopoly a lot more fun?

About the Contributor

Aaron Filbeck, CAIA, CFA, CFP®, CIPM, FDP is Managing Director, Content & Community Strategy at CAIA Association. His industry experience lies in private wealth management, where he was responsible for asset allocation, portfolio construction, and manager research efforts for high-net-worth individuals. He earned a BS with distinction in finance and a master of finance from Pennsylvania State University.

Aaron Filbeck
Managing Director, Content & Community Strategy
CAIA Association

CAIA Association is a global network of forward-thinking investment professionals, redefining the future of capital allocation in a world where traditional and alternative converge. United by a commitment to improving investment outcomes, we lead with authority, educate to inspire, and connect people who turn insight into action. To learn more about the CAIA Association and how to become part of the most energized professional network shaping the future of investing, please visit us at https://caia.org/.