Dynamic Multi-Asset Class Portfolio Implementation Strategy

As a senior portfolio manager at a wealth management firm, you have been tasked with implementing a dynamically managed multi-asset class portfolio for a high-net-worth client. The client has expressed an objective of achieving capital growth while maintaining a risk level consistent with a moderate risk tolerance. The current market environment is characterized by elevated interest rates, geopolitical uncertainty, and shifting correlations among asset classes.

Your starting asset allocation strategy includes equities, fixed income, alternatives, and cash. Consider how you would approach the following elements to maximize the portfolio's performance while adhering to the client’s risk profile:

• Asset allocation rebalancing frequency and methodology.
• Utilization of derivatives for hedging or enhancing returns.
• Tax considerations when implementing trades in taxable vs. tax-deferred accounts.
• Incorporating environmental, social, and governance (ESG) factors into the investment process.

Discuss your asset allocation implementation strategy in detail, addressing the above elements while considering the unique aspects of this client’s situation.