Understanding Tactical Asset Allocation Recommendations

Tactical Asset Allocation (TAA) is an investment strategy that actively adjusts a portfolio's asset allocation in response to expected market conditions. Unlike strategic asset allocation, which is more static and focuses on the long-term, TAA involves making short-term shifts to capitalize on perceived market inefficiencies.

In an investment committee meeting, the chief investment officer (CIO) suggests increasing the allocation to equities given the expected rise in interest rates, as this may lead to higher corporate earnings growth. How should the team interpret this recommendation based on the principles of Tactical Asset Allocation?