Managing Market Risk in Portfolio Management

As a portfolio manager, you are evaluating a client’s investment strategy that includes a diversified mix of equity, fixed income, and alternative investments. Your client is concerned about the potential impact of market volatility on their portfolio's overall returns.

Discuss the basic concepts of market risk and outline strategies that can be employed to manage this type of risk within the context of the client’s investment strategy. Be sure to provide examples to illustrate your points.