Effective Strategy to Mitigate Market Risk

John is a portfolio manager overseeing a diversified equity fund. Recently, he has been concerned about the increasing volatility in the stock market as economic indicators suggest potential downturns. In light of this, he considers several strategies to mitigate his fund's exposure to market risk. He is exploring both hedging techniques and adjustments to the sector allocation within the portfolio.

Which of the following strategies would be the most effective in reducing the portfolio's exposure to market risk?