Global Integration's Impact on Asset Allocation Strategy

Consider the following scenario: You are the lead portfolio manager for a global asset management firm. Your firm's flagship fund is a diversified multi-asset portfolio that includes equities, fixed income, alternative investments, and cash. Recently, due to macroeconomic shifts and geopolitical tensions, there has been increased volatility across global markets.

Your Chief Investment Officer (CIO) has tasked you with evaluating the current asset allocation strategy, particularly its global integration approach. The CIO is particularly interested in how global diversification can mitigate risk and enhance return in an environment of rising interest rates and inflation globally.

In your response, analyze the extent to which global integration can affect the asset allocation of the portfolio. Consider both qualitative and quantitative factors, including but not limited to risk-return trade-offs, correlation of global assets, and the role of currency exposure. Additionally, outline any strategic changes you would recommend to the asset allocation to respond to the current market dynamics while focusing on long-term investment goals.