A fund manager is evaluating a global asset allocation strategy for a multi-national pension fund. The fund currently holds a diversified portfolio with significant allocations in U.S. equities, European bonds, and emerging markets stocks. Recently, the fund manager has become concerned about geopolitical tensions in Europe and economic instability in emerging markets.
The manager is considering reallocating a portion of the investment into alternative assets, including commodities and real estate, in order to add diversification and reduce reliance on traditional equity and bond markets. Which of the following allocations would most likely improve the fund’s diversification while maintaining a level of risk appropriate for a pension fund?