Understanding Tactical Asset Allocation Objectives

Very Easy Asset Allocation Tactical Asset Allocation

Emily is a portfolio manager who frequently adjusts her investment strategy based on short-term market conditions while maintaining a long-term perspective. She believes that by altering the weightings of different asset classes, she can take advantage of market inefficiencies. This approach is known as tactical asset allocation (TAA).

Which of the following best describes the primary objective of tactical asset allocation?

To achieve risk-free returns by investing in government bonds only.

To modify asset class weightings to capitalize on perceived short-term opportunities.

To ensure a fixed asset allocation regardless of market changes.

Hint

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