You are a fund manager of a
diversified portfolio the following asset class exposures: Cash (20%)Bonds (10%)Property (10%)Australian Equities (30%)Global Equities (30%) As inflation around the world eases, you believe interest rates will fall and as a result you believe this will be beneficial to the performance of equities. You decide to reduce your exposure to cash in favour of Australian Equities. This is an example of:

Question

BlackTom AI · Accepted Answer

Tactical asset allocation involves making short- to medium-term deviations from a portfolio’s long‑term (strategic) target weights to exploit anticipated market or economic opportunities.

1. Relevant knowledge points and concepts
- Strategic asset allocation: the long-run target weights across asset classes based on risk/return objectives and liabilities. Changes are infrequent and long‑term.  
- Tactical asset allocation (TAA): temporary overweight/underweight decisions around the strategic weights to capture expected short‑term or cyclical opportunities (macro views, interest rates, valuations).  
- Security selection: choosing individual securities within an asset class (stock picking), not changing asset-class weights.  
- Asset/liability management (ALM): aligning assets to meet specific liability cash flows and risk constraints, not short-term market timing.  
- Tax minimisation strategy: structuring transactions/holdings to reduce tax, unrelated to market-timing between asset classes.

2. Step‑by‑step reasoning
- The portfolio has set exposures (cash 20%, Australian equities 30%, etc.), which represent the current allocation.  
- You form a macro view: easing inflation → falling interest rates → equities likely to benefit. That is a market timing / short- to medium‑term forecast.  
- You act by reducing cash and increasing Australian equities to take advantage of the forecast. This is a deliberate, temporary shift in asset-class weights based on an economic outlook.

3. Calculations
- No numeric calculation required; the action is a reweighting between asset classes (cash → equities).

4. Why the correct answer is correct
- The change is a deviation from the standing allocation to exploit expected market movement, which is precisely the definition of tactical asset allocation.

5. Why other options are incorrect
- a. Asset/Liability management: focuses on matching assets to liabilities, not market timing.  
- b. Security selection: concerns choosing specific stocks/bonds, not changing asset-class weights.  
- c. Strategic asset allocation: would set new long-term targets, not a short-term overweight for a forecast.  
- d. Tax minimisation strategy: irrelevant to the motivation described.

6. Conclusion
This action is tactical asset allocation; therefore the correct answer is e. Tactical asset allocation.

类似问题

During a 'Late Growth' phase of the economic cycle, which tactical asset allocation shift is suggested relative to an 'Early Growth' phase?

A project has a required return of 12.6 percent, an initial cash outflow of $42,100, and cash inflows of $16,500 in Year 1, $11,700 in Year 2, and $10,400 in Year 4. What is the net present value?

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