Endowment Fund Asset Allocation Analysis

Imagine you are an institutional portfolio manager responsible for managing a diversified fund for a university endowment. The endowment has a target allocation of 60% equities, 30% fixed income, and 10% alternatives. Recently, the investment committee has expressed concerns regarding increasing market volatility and its potential impact on the endowment's long-term growth objectives. They have asked for a detailed analysis of the current asset allocation strategy with specific recommendations for adjustments. In your response, consider the rationale behind the endowment's target allocation, the importance of asset allocation implementation, potential risks of market volatility on each asset class, and the implications of your recommended changes for the portfolio's overall performance and risk profile.