Managing Market Risk in a High-Net-Worth Portfolio

As a portfolio manager for a high-net-worth client, you are tasked with assessing and managing the market risk of their investment portfolio, which heavily invests in equities and fixed income. The client expresses concerns about potential market downturns and their willingness to accept risk is limited. They have mentioned that their goal is capital preservation with some growth over a five-year horizon.

Your analysis needs to address the following:

• Detail the various market risk factors that could impact the client's portfolio and how they interact.
• Identify at least two risk management strategies that could be employed to mitigate these market risks while still allowing for potential growth.
• Explain how you would implement these strategies, including specific tools or instruments you would use, and any potential trade-offs involved in your approach.

In your response, please provide a comprehensive analysis that reflects an understanding of advanced portfolio management concepts and integrates real-world considerations.