Tactical Asset Allocation in Rising Interest Rates

ABC Capital is a discretionary investment management firm that follows a strategic asset allocation strategy as its primary investment approach. Recently, their team has observed significant macroeconomic changes, including a rising interest rate environment and increasing inflation expectations. In light of these developments, the Chief Investment Officer (CIO) suggests implementing a tactical asset allocation shift to mitigate risks and capture short-term opportunities.

Considering the current economic outlook, the investment committee is evaluating the potential benefits of reallocating funds away from equities into fixed income and commodities. They seek to understand how this tactical asset allocation adjustment aligns with their long-term strategic goals.