Objective of Tactical Asset Allocation

Very Easy Asset Allocation Tactical Asset Allocation

An investor is reviewing their portfolio strategy and is considering the use of Tactical Asset Allocation (TAA) to adjust their portfolio based on short-term market conditions. TAA involves making active shifts to the asset allocation within a portfolio to take advantage of expected short-term movements in different asset classes.

Given this context, which of the following best describes the primary objective of Tactical Asset Allocation?

To maintain a long-term fixed allocation of assets regardless of market conditions.

To strategically alter the asset allocation in response to market forecasts.

To minimize transaction costs by holding assets for the long term.

Hint

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