Dynamic Asset Allocation Strategy Implementation

As the lead portfolio manager at a private wealth management firm, you are tasked with implementing a dynamic asset allocation strategy for a sophisticated client with a high-risk tolerance. The client has instructed that their portfolio should be adjusted based on macroeconomic indicators, particularly focusing on interest rate changes and inflation expectations. In light of recent market volatility, you are considering three approaches to manage the portfolio's asset allocation:

- Option A: Increase allocation to commodities when inflation is expected to rise, while decreasing equity exposure.

- Option B: Use a tactical asset allocation approach that increases equity exposure in a risk-on environment while maintaining a stable allocation to fixed income regardless of macroeconomic conditions.

- Option C: Implement a strategic asset allocation that periodically rebalances back to the target weights, based on a set threshold for deviations, regardless of macroeconomic cues.