Pension Fund Global Asset Allocation Adjustment

Hard Asset Allocation Global Asset Allocation

Global asset allocation is an essential strategy in portfolio management, particularly for investors looking to diversify their exposure across different asset classes and geographic regions. Consider a pension fund that is re-evaluating its asset allocation strategy in light of changing macroeconomic conditions, currency fluctuations, and geopolitical risks.

The fund currently has a target allocation of 60% to equities, 30% to fixed income, and 10% to alternative investments. Due to recent turbulence in emerging markets, the fund manager is contemplating adjusting the weights to reduce exposure to equities and increase investments in alternatives.

Given this context, which of the following adjustments would most appropriately align the fund's asset allocation strategy with the principles of global asset allocation?

Shift the allocation to 50% equities, 20% fixed income, and 30% alternatives.

Maintain the current allocation but invest in a broader array of international equities.

Reduce the equity allocation to 40% and increase fixed income to 40%, while eliminating alternative investments.

Hint

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