None. Macro signals should not change your SAA.
This is a foundational distinction worth being precise about.
Your Asset Allocation — definition">Strategic Asset Allocation is your long-run target — set from your goals, time horizon, risk capacity, and risk tolerance. It should only change when you change: a new dependent, a job shift, a major purchase, retirement approaching. [10]
"SAA decisions involve 'time in the market' whereas TAA is for 'timing the markets'." [10]
Macro signals — RBI rate moves, CPI prints, yield curve shape — are inputs to Tactical Asset Allocation (TAA): temporary, time-limited deviations from your SAA, typically over a 6–18 month horizon. [1]
The evidence on TAA is candid: pure macro-timing has a mediocre out-of-sample track record. The only form with modest genuine benefit is systematic valuation-based TAA — overweighting cheap asset classes, underweighting expensive ones. [1]
Even then, doing it well requires:
1. Correctly identifying the business cycle phase
2. Forecasting asset class behaviour in that phase
3. Implementing at low cost and low tax burden
4. Having the temperament to be contrarian [1]
| Decision | Driver | Changes when… |
|---|---|---|
| SAA | Your life: goals, horizon, risk capacity | Life events, not markets |
| TAA | Market signals: valuations, yield curve, cycle phase | Medium-term signals, within SAA bands |
If a macro signal feels urgent, the least costly response is redirecting new SIP contributions toward underweighted asset classes — not selling existing holdings and triggering capital gains. [1]
Apply this → Before touching any allocation, check India Macro Dashboard to distinguish what's a TAA signal from what's noise — and whether your SAA itself was ever properly set in the first place. Module 02 (Strategic Allocation) covers SAA construction step by step.