Strategic Asset Allocation for a Wealthy Family Office

You are a portfolio manager for a family office that manages substantial wealth for multiple generations. Your clients, a wealthy couple, have diverse investment backgrounds and a shared goal of capital preservation, while also wishing to increase their portfolio’s growth potential over the long term. They are both 60 years old and plan to fund their children’s education as well as provide an inheritance for future generations. Recently, they expressed concerns over market volatility and inflation, and they want to understand how your strategic asset allocation approach can mitigate these risks.

Based on their objectives and constraints, discuss the key considerations in constructing a strategic asset allocation plan for this family office. Include an examination of both the asset classes that should be included as well as the rationale for the proportions allocated to each. Furthermore, evaluate how adjustments might be made over time in response to changing market conditions or shifts in client objectives.