Chartered Investment Manager (CIM) Practice Exam · Question
How does global tactical asset allocation (GTAA) differ from strategic asset allocation?
Strategic asset allocation sets a long-term target, whereas GTAA is an active strategy that involves making short-to-medium-term deviations from the strategic a
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Question: How does global tactical asset allocation (GTAA) differ from strategic asset allocation?
Answer options:
- GTAA focuses solely on domestic markets, while strategic allocation is global. ✅ GTAA involves active, short-to-medium-term adjustments based on market opportunities, while strategic is long-term and passive.
- GTAA uses only passive index funds, while strategic allocation uses individual securities.
- GTAA aims to minimize trading costs, while strategic allocation prioritizes high turnover.
Correct answer: GTAA involves active, short-to-medium-term adjustments based on market opportunities, while strategic is long-term and passive.
Explanation: Strategic asset allocation sets a long-term target, whereas GTAA is an active strategy that involves making short-to-medium-term deviations from the strategic asset allocation based on market conditions, economic forecasts, and perceived opportunities to generate alpha.
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