Choosing Tactical Asset Allocation for Portfolio Management

Ronald is managing a family trust with diverse financial assets. He is in the process of implementing an asset allocation strategy designed to achieve long-term capital appreciation while providing moderate income. Recently, he learned about a tactical asset allocation approach which allows for adjustments based on market conditions. Ronald's clients are comfortable with a moderate level of risk and their investment horizon extends over 20 years.

As part of the implementation process, Ronald must decide how to adjust the portfolio's exposure based on economic indicators, while also considering transaction costs, tax implications, and the need to maintain adequate liquidity. His main goal is to optimize the asset allocation for both risk and return.