Tactical Asset Allocation - when is it appropriate to use? (from Abel practice problems - #2)

[hei.so]

Can someone clear this up for me? TAA is when an investor overweights and underweights an asset category to take advantage of short term rates. But then it also says to not alter a policy portfolio if long-term relationships are not affected.
What does it mean by “TAA is active management at the asset-class level”? Are equities European equities or NA equities not considered “asset-class level”?

 

[MrSmart]

International equity and domestic equity are two seperate asset classes.

 

[gad4]

What I believe it is saying is that there are minor shifts in the asset class weights to take advantage of short term rates.

 

[hei.so]

^Yes it says that but in an IPS, it also says to not change the weighting if it doesn’t affect the long term outlook.