Rebalancing Strategies for a High-Net-Worth Portfolio

ABC Wealth Management is currently managing a diversified portfolio for a high-net-worth client with a total invested amount of $5 million. The portfolio is composed of 60% equities, 30% fixed income, and 10% alternative investments. The client’s investment objective is to achieve capital appreciation with moderate risk. The firm regularly reviews the portfolio and aims to maintain the target asset allocation.

Over the past year, the equity market has experienced significant volatility, resulting in the equity portion of the portfolio rising to 75%. Meanwhile, the fixed income allocation decreased to 20%, and alternative investments remained at 10%. Due to the client's risk tolerance and market conditions, the investment team believes it is essential to rebalance the portfolio to restore the original allocation.

Assuming transaction costs are negligible, discuss the reasons for rebalancing this portfolio, the potential strategies to achieve the rebalancing, and any considerations the team should keep in mind while executing the rebalancing strategy.