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Tactical Asset Allocation
Definition
This is a portfolio management technique that involves making short term adjustments to the asset class weights in a portfolio in order to take advantages of perceived changes in the near term broad market environment.
Using the term Tactical Asset Allocation :
Mrs. Bancroft's broker tilted her portfolio into an overweight position in bonds because he believed that the Fed would soon cut interest rates, which would increase the value of bonds.
Pay Special Attention To :
Sometimes the predictions of even the best investment managers may be incorrect. If they tactically allocated assets incorrectly then the portfolio may suffer more than if no action were taken at all.
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Related terms
portfolio management, asset allocation
