Understanding Tactical Asset Allocation in Investment Strategy

A financial advisor is working with a client who has a significant investment in a diversified portfolio but is interested in exploring Tactical Asset Allocation (TAA) strategies. This client is concerned about potential market downturns and is eager to understand how TAA could help manage risk while aiming for enhanced returns in the short to medium term.

Discuss the role of Tactical Asset Allocation in managing investment risk and enhancing returns. Include a brief overview of how TAA differs from Strategic Asset Allocation (SAA), when an investor might decide to utilize TAA, and the potential risks associated with a tactical approach.