Tactical Allocation Strategy Amidst Expected Rate Changes

As the lead portfolio manager for a prominent investment advisory firm, you are tasked with revisiting your tactical asset allocation (TAA) strategy due to emerging macroeconomic indicators suggesting potential interest rate hikes. In your analysis, you observe that the financial sector has historically outperformed during rising interest rate environments, while growth sectors like technology often lag due to increased borrowing costs.

Additionally, you consider your client's risk tolerance, which allows for moderate exposure to volatility but aims to outperform a benchmark composed of 60% equities and 40% fixed income assets. You had previously allocated 50% of the portfolio to equities, with 20% in financials, and a 30% exposure to technology. You are now evaluating whether to adjust sector allocations in response to the expected rate changes.

Given these considerations, which of the following sector reallocations would best align with your strategy amidst the expected rising interest rates?