Pension Fund Asset Allocation Strategy

Consider a pension fund that is evaluating its investment strategy in light of the evolving financial landscape. The fund has a target asset allocation of 60% equities, 30% fixed income, and 10% alternatives. Recently, the fund's investment committee discussed changes in the investment environment, particularly the impact of rising interest rates on bond prices and the volatility in the equity markets.

Given this context, the director of the pension fund is considering whether to adjust the fund's asset allocation to enhance returns while managing risk effectively. The options being considered include a shift towards a greater allocation in alternatives, reducing fixed income exposure, or increasing equity investments.

Which of the following options represents a prudent decision in alignment with the current investment challenges faced by the pension fund?