Evaluating Conservative vs. Aggressive Asset Allocation for Pension Funds

The DEF Pension Fund is a large defined benefit plan serving employees of a government agency. The fund's primary objective is to ensure that pension obligations are met reliably over the long term. Recently, the pension fund's board of trustees has been reviewing its investment strategy, considering both the expected returns and the associated risks of various asset classes. The board is particularly concerned about market volatility and its potential impact on the fund's ability to satisfy future payments to beneficiaries.

Given this context, the board is evaluating the benefits and drawbacks of a more conservative asset allocation strategy compared to a more aggressive one. The fund currently has a significant portion of its assets invested in equities, with the remainder in fixed income and alternative investments.