Understanding the Objective of Tactical Asset Allocation

Very Easy Asset Allocation Tactical Asset Allocation

Tactical Asset Allocation (TAA) is an investment strategy that actively adjusts the weightings of various asset classes in a portfolio in response to changing market conditions. Unlike strategic asset allocation, which is more static and focused on long-term goals, TAA emphasizes the short term. Which of the following describes the main objective of Tactical Asset Allocation?

To maintain a fixed proportion of investments in various asset classes regardless of market conditions.

To exploit market inefficiencies and take advantage of short-term market movements.

To achieve higher returns by strictly following a long-term investment strategy.

Hint

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