Appropriate Asset Allocation for Moderate Risk Client

Easy Investment Policy And Allocation Asset Allocation

John is an investment manager responsible for allocating assets in a diversified portfolio. His client has a moderate risk tolerance and seeks reasonable long-term growth while minimizing risk. As John prepares to set the asset allocation for the portfolio, he must decide how much capital to allocate to various asset classes, including equities, fixed income, and alternative investments.

Which of the following asset allocation strategies would be most appropriate for John's client?

Allocate 80% to equities and 20% to fixed income.

Allocate 60% to equities, 30% to fixed income, and 10% to alternatives.

Allocate 50% to fixed income and 50% to cash equivalents.

Hint

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