Evaluating and Proposing Strategic Asset Allocation for Aggressive Growth

As a portfolio manager for a high-net-worth individual, you are tasked with reviewing the client's current strategic asset allocation strategy. The client has a strong preference for aggressive growth and is willing to accept higher levels of risk in pursuit of long-term capital appreciation. The current allocation is 70% equities (with a mix of domestic and international stocks), 20% fixed income (comprised primarily of corporate bonds with varying durations), and 10% cash equivalents.

In light of ongoing market volatility and the shifting economic environment, please address the following:

1. Evaluate the effectiveness of the current asset allocation given the client’s risk tolerance and investment goals.
2. Propose a revised strategic asset allocation that could better align with the client’s aggressive growth objective while managing risk. Justify your proposed allocation with regard to the expected returns, risk characteristics, and any relevant economic indicators or trends.
3. Discuss how this revised allocation might respond to potential changes in the economic landscape, such as rising interest rates or geopolitical tensions.