ETF Spotlight: TACK, The Tactical Sector Fund of Funds

As economic uncertainty builds amid an escalating trade war and growing fears of a recession, many investors are shifting into defensive assets, and the Fairlead Tactical Sector ETF (TACK) has benefited from this shift in sentiment.  

The fund’s current allocation leans heavily to traditionally defensive sectors, such as consumer staples and utilities, along with exposure to gold—all of which have outperformed the broader S&P 500 index so far in 2025.  

As volatility persists and investors seek downside protection, TACK’s rules-based, risk-managed approach has positioned it as a timely solution in today’s environment.

How the TACK ETF Works

Launched by Fairlead Strategies in 2022, the TACK exchange-traded fund employs a technically driven, tactical sector rotation strategy. A fund of funds consisting of SPDR ETFs, TACK is an actively managed ETF that uses technical analysis—such as trend following and momentum indicators—to determine which sectors or asset classes to hold.

When the model signals broad market weakness, TACK can shift partially or entirely into Treasurys or gold to help preserve capital.

Top 10 TACK ETF Holdings: SPDR Sector Funds

Source: etf.com data as of April 15, 2025.

Pros and Cons of Investing in TACK

While TACK offers professional management and has proven to minimize downside risks in 2025, it’s not an ideal investment for everyone. Here are some pros and cons to consider.

Pros

• Tactical model provides defensive positioning in volatile markets.
• Technical analysis removes emotion and aims to capture trends.
• It provides exposure to diversified asset classes (equities, Treasurys, gold).
• The ETF is actively managed but in a systematic and rules-based way.

Cons

• It may lag in sharp rebounds if the model remains defensive.
• It relies heavily on technical signals, which may generate whipsaws.
• The ETF is less suitable for investors seeking broad passive exposure.
• Turnover may be higher than traditional index ETFs.

Outlook for TACK in 2025

With the market facing elevated risks from tariffs, slowing global growth and geopolitical tensions, the TACK ETF’s cautious positioning could continue to serve investors well in the near term. Its current allocation to consumer staples, utilities and gold is aligned with the broader market shift toward safety.  

If the macroeconomic environment deteriorates further or volatility increases, TACK's model may shift even more defensively. However, if markets recover quickly or rally on positive news, the fund’s allocations may underperform more aggressive growth strategies until technical indicators reverse.

TACK: A Tactical Tool, But Not Without Risk

TACK has delivered on its promise so far in 2025 by helping investors manage downside risk through sector rotation and tactical allocation. Its disciplined, technical approach offers an appealing alternative to traditional active management, especially in uncertain times. Still, investors should recognize that no strategy is risk-free.  

The ETF may underperform during sudden market rallies, and its reliance on technical signals doesn't guarantee success in every cycle. For those seeking a risk-aware, actively managed ETF solution, however, TACK offers a unique and timely approach.