Regime-based tactical asset allocation - it can add value

A simple paper that focuses on tactical asset allocation based the business cycle suggest that using macro top-down information will be helpful for forming a dynamic portfolio. See "Regime-Based Strategic Asset Allocation". 

The authors break up the macro environment into four regimes: overheating, goldilocks, stagflation, and downturn. Given these environments, different portfolios are formed using just five assets: equities, government bonds, credit, commodities, and REITs. Given these 5 assets, the authors form risk-based and equal-weighted portfolios focused on regime probabilities and compare with an optimized, equal-weighted, and risk budget portfolios. These portfolio constructs suggest that regime-based portfolios can support better risk-adjusted returns.