Strategic Asset Allocation for a Moderate-Risk Client

As a portfolio manager for a wealth management firm, you are tasked with developing a strategic asset allocation plan for a moderate-risk client. The client has a target investment horizon of 10 years and a current portfolio value of $1 million. The client’s financial goals include retirement funding, potential college expenses for two children, and wealth preservation. The client has indicated the following risk preferences: a moderate level of volatility is acceptable, with an emphasis on capital preservation and a desire for some growth.

Your assignment is to outline a strategic asset allocation strategy that considers the client’s goals, risk tolerance, and investment horizon. Discuss the factors you would prioritize in developing this strategic allocation and recommend a specific asset allocation mix that aligns with the client's objectives. Justify your recommendations by including the expected returns and risks associated with each asset class included in your strategy.