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CFA Level 3
Portfolio Management and Wealth Planning

Evaluating Tactical Asset Allocation Strategy

Easy Asset Allocation Tactical Asset Allocation

Daniel, a portfolio manager, is evaluating his client's investment strategy with a focus on Tactical Asset Allocation (TAA). He believes that short-term market movements present opportunities to increase returns by adjusting the asset allocation strategically. He is considering the following tactical adjustments based on recent market research:

1. Increase equity exposure by 10% due to anticipated growth in the technology sector.

2. Decrease fixed income exposure by 5% as interest rates are expected to rise.

3. Maintain a constant allocation to commodities as they do not exhibit any short-term fluctuations.

Which option represents the best tactical asset allocation strategy considering Daniel's goal of maximizing returns in the short-term?

Hint

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% Correct54%