Effective Strategies for Managing Market Risk

In a recent performance review, you, as a portfolio manager, have been analyzing the effectiveness of various strategies employed to manage market risk in your client’s portfolio. The portfolio primarily consists of equities, with a heavy allocation to technology stocks. With increased market volatility owing to macroeconomic factors, you are considering the possible implementation of hedging strategies to mitigate further risks. Alternatively, you contemplate reallocating some assets into more stable investment vehicles to balance exposure.

Which of the following strategies would most effectively reduce the portfolio's market risk with the least impact on the expected returns?