Optimal Asset Allocation Strategy for Balanced Investment

Very Hard Investment Policy And Allocation Asset Allocation

In the context of portfolio management, consider an investor who has a goal of achieving both capital appreciation and income generation. The investor's risk tolerance is moderate, and they currently have a diversified portfolio comprising 60% equities and 40% bonds. Realizing shifts in market conditions, the investor is contemplating a strategic asset allocation adjustment to better align with their investment objectives over the next five years.

In light of these factors, which of the following asset allocation strategies would likely provide the most balanced approach for meeting the investor's objectives?

Increase equities to 80% and reduce bonds to 20% to maximize capital growth.

Shift to a 50% allocation in equities and 50% in bonds to enhance stability and income.

Maintain the current 60% equities and 40% bonds allocation with an annual review.

Hint

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