Which of the following scenarios best illustrates a tactical asset allocation decision made by a Canadian portfolio manager?

Question: Which of the following scenarios best illustrates a tactical asset allocation decision made by a Canadian portfolio manager?

Answer options:

• Maintaining a 70/30 equity/fixed income split over 20 years for a retired client. ✅ Increasing exposure to Canadian infrastructure ETFs by 3% for the next 6-12 months, anticipating federal stimulus spending.
• Reducing the portfolio's small-cap allocation to align with a new, lower risk tolerance assessment.
• Annually adjusting bond ladder maturities to match foreseen liabilities for an institutional client.

Correct answer: Increasing exposure to Canadian infrastructure ETFs by 3% for the next 6-12 months, anticipating federal stimulus spending.

Explanation: Tactical asset allocation involves active, short-to-medium-term adjustments based on market outlook. Increasing infrastructure exposure for 6-12 months due to anticipated stimulus is a clear example of such a short-term, opportunistic adjustment.