Strategic Management of Sovereign Wealth Funds in Volatile Markets

You are a portfolio manager for a sovereign wealth fund (SWF) that focuses on long-term capital growth while considering environmental, social, and governance (ESG) factors. Recently, your fund has evaluated the impact of global market volatility on its asset allocation strategy and has identified potential responsive measures to enhance resilience.

Your task is to develop a comprehensive strategy that addresses the following three components: 1) Adjustments in asset allocation 2) Integration of ESG factors into investment decision-making 3) Risk management practices to bolster fund performance.

In your response, provide a detailed plan that illustrates how each component will be implemented and how they collectively support the fund’s objectives. Justify your recommendations and consider any trade-offs or challenges the fund may face.