Goal of Strategic Asset Allocation

John is a portfolio manager who follows a strategic asset allocation strategy for his clients. He has recently assessed the capital market expectations, which indicate that equities are projected to return 8% per annum with a volatility of 15%, while bonds are expected to return 4% with a volatility of 5%. The correlation between equities and bonds is estimated to be 0.2.

As part of his strategy, John is considering reallocating his client's portfolio towards more equities to take advantage of the higher expected return. However, he is also aware of the necessity to balance this with risk considerations.

What is the primary goal of strategic asset allocation in portfolio management?