Answer: tactical asset allocation.

## Explanation This question tests the understanding of different portfolio management strategies: **Security Selection**: Refers to choosing specific securities within an asset class (e.g., picking individual stocks or bonds). **Portfolio Rebalancing**: Involves bringing the portfolio back to its target asset allocation when market movements cause deviations from policy weights. **Tactical Asset Allocation**: Involves making short-term adjustments to the strategic asset allocation based on capital market expectations to exploit perceived market inefficiencies or opportunities. **Why C is correct**: - The fund manager is adjusting the portfolio's equity allocation away from the policy weights - This adjustment is based on "short-term capital market expectations" - The goal is to "take advantage" of these expectations - These characteristics align perfectly with tactical asset allocation, which involves short-term deviations from strategic policy weights to capitalize on market opportunities **Why A is incorrect**: Security selection focuses on choosing specific securities within an asset class, not adjusting the overall allocation between asset classes. **Why B is incorrect**: Portfolio rebalancing involves returning to policy weights, not deviating from them. Rebalancing would mean buying more equities to return to the target allocation, not holding less.

Author: LeetQuiz .