Investment Strategy for ABC Pension Fund

ABC Pension Fund is a large, defined-benefit pension plan with a total asset base of $10 billion. The fund serves a diverse group of employees in the public sector, and its nominal return objectives are set at 6% per annum. Recently, the fund has faced challenges including increasing longevity risk, a low interest rate environment, and regulatory pressures regarding transparency and responsible investing.

Your task is to provide a comprehensive investment strategy for the ABC Pension Fund that addresses these challenges while ensuring that the fund meets its return objectives over the long term. In your response, you should:

1. Identify and analyze the key risks facing the pension fund.
2. Discuss how asset allocation can be adjusted to mitigate these risks.
3. Describe any alternative investment classes that could provide additional return potential or diversification benefits.
4. Consider the implications of regulatory pressures on the fund's investment strategy, particularly regarding ESG (Environmental, Social, Governance) factors.

Be careful to support your recommendations with sound reasoning and example data where relevant.