Strategic Asset Allocation Plan for a High Risk Tolerance Client

Medium Asset Allocation Strategic Asset Allocation

Emma is a financial advisor who is developing a strategic asset allocation plan for a client named Alex, who is 35 years old with a high risk tolerance and a goal to accumulate wealth over the next 20 years. Given Alex’s long time horizon and willingness to accept volatility for potential high returns, Emma has to consider the appropriate mix of equity, fixed income, real assets, and alternative investments in Alex's portfolio. In this context, which of the following asset allocation strategies is most appropriate for Alex?

A strategic asset allocation of 80% equities, 15% fixed income, and 5% cash equivalents.

A balanced allocation of 60% equities and 40% fixed income.

A 100% equity allocation, given the high risk tolerance and long time horizon.

Hint

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% Correct67%