An investment committee for a Canadian pension fund determines that the domestic economy is entering a period of rising interest rates and subdued growth. Consequently, they decide to temporarily underweight growth stocks and overweight value stocks in their equity allocation for the next 6-12 months. This decision is an example of which of the following?

Question: An investment committee for a Canadian pension fund determines that the domestic economy is entering a period of rising interest rates and subdued growth. Consequently, they decide to temporarily underweight growth stocks and overweight value stocks in their equity allocation for the next 6-12 months. This decision is an example of which of the following?

Answer options:

• Strategic Asset Allocation ✅ Tactical Asset Allocation
• Passive Portfolio Management
• Glide Path Adjustment

Correct answer: Tactical Asset Allocation

Explanation: Tactical asset allocation involves making short-term adjustments to the strategic asset allocation weights based on market forecasts or perceived opportunities. Shifting between growth and value stocks based on economic outlook over a 6-12 month horizon is a classic example of this short-term, active strategy.