Implementing Asset Allocation for a High-Net-Worth Client

As a portfolio manager at a wealth management firm, you are tasked with implementing an asset allocation strategy for a high-net-worth client. This client has a risk tolerance level categorized as moderate, and they prefer a long-term investment horizon. Your research suggests a strategic asset allocation of 60% equities and 40% fixed income to achieve a suitable return profile while managing risk. However, the current market environment is volatile, and the client is open to both tactical and strategic adjustments in their portfolio.

Discuss your approach to implementing this asset allocation strategy, including the considerations in selecting specific equity and fixed-income securities, the potential use of derivatives for risk management, and how to communicate the anticipated performance to the client over time. Additionally, explain how you would monitor and rebalance the portfolio to ensure alignment with the original asset allocation plan.