What is the goal of a portfolio manager who practices market timing?

The goal of a portfolio manager who practices market timing is to strategically shift investments from one class of security to another in anticipation of economic changes. This approach involves actively predicting market movements and making investment decisions based on anticipated economic conditions, such as changes in interest rates, inflation, or other macroeconomic factors.

By anticipating future market trends, the manager aims to optimize returns by being invested in the right asset classes at the right times. For instance, during an economic downturn, the manager might move investments from equities to fixed income securities to protect capital, while conversely, during a bullish market, they may move back into equities to take advantage of the growth potential. This active management strategy distinguishes market timing from other approaches that may focus on consistent asset allocation or risk minimization.