Understanding Tactical Asset Allocation Techniques

In the context of Tactical Asset Allocation (TAA), an investment manager adjusts the allocation of assets based on short-term market forecasts and economic indicators. Consider a scenario where an investor believes that the bond market is about to experience a downturn due to expected interest rate hikes initiated by the central bank. Given this belief, the investor decides to reduce allocation to bonds and increase allocation to equities that are expected to provide better returns in the short term.

Which of the following statements best describes the key characteristic of Tactical Asset Allocation as applied in this scenario?