Identifying Tactical Asset Allocation Applications

Medium Asset Allocation Tactical Asset Allocation

As an investment manager, you are considering the principles of Tactical Asset Allocation (TAA) for an actively managed portfolio. TAA involves making short-term adjustments to the asset allocation based on predictions about market trends and economic changes. You have identified three possible strategies that can be employed based on current market conditions. Your task is to evaluate these strategies and determine which one best represents the use of tactical asset allocation.

Increasing equity exposure during periods of economic expansion while reducing bond exposure.

Maintaining a fixed 60% equity and 40% bond allocation regardless of market conditions.

Rebalancing the portfolio back to target allocations at regular intervals.

Hint

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