Managing Market Risk in a High-Net-Worth Portfolio

Imagine you are a portfolio manager for a high-net-worth client, Jane Doe, who holds a diversified investment portfolio worth $5 million. Recently, Jane expressed concerns about the increasing market volatility and potential impact on her investments. She has a long-term investment horizon but is sensitive to short-term fluctuations due to a recent market downturn. As her portfolio manager, you are tasked with reviewing her current asset allocation, evaluating her exposure to market risk, and providing a comprehensive strategy to manage this risk while aligning with her investment objectives.

In your response, address the following points:

• Assess Jane’s current asset allocation and identify potential market risks.
• Discuss various strategies that could effectively mitigate market risk while maintaining her portfolio’s growth potential.
• Provide recommendations for periodic re-evaluation of market risk and portfolio adjustments.