Understanding Tactical Asset Allocation

Very Easy Asset Allocation Tactical Asset Allocation

During a quarterly investment meeting, the Chief Investment Officer (CIO) of a wealth management firm discusses the firm's approach to adjusting asset allocations based on anticipated short-term market movements. The CIO explains that while the strategic asset allocation sets a long-term framework, tactical asset allocation allows for fine-tuning of investments to capitalize on perceived market inefficiencies.

Which of the following statements best describes Tactical Asset Allocation (TAA)?

TAA involves maintaining a fixed allocation to asset classes regardless of market conditions.

TAA seeks to outperform a strategic asset allocation by adjusting exposure to asset classes based on short-term market forecasts.

TAA is solely focused on long-term investment horizons without regard to market fluctuations.

Hint

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