Pension Fund Asset Allocation Strategy

A large pension fund is reviewing its investment strategy in light of recent market volatility and changing demographics among its beneficiaries. The fund has a long-term investment horizon and aims for both capital preservation and growth to meet future benefit payments.

The fund manager is considering three main asset allocation strategies: a conservative approach that emphasizes fixed-income securities, a balanced approach that diversifies across both equity and fixed-income, and an aggressive approach that predominantly invests in equity markets.

Which of the following strategies is likely to best align with the pension fund’s objectives given its long-term investment horizon and necessity to manage risk effectively?