1.As an investment advisor, you are approached by a very strange client.The client holds a fairly diverse portfolio of stocks, but all of the stocks are stocks found in the U.S.He is concerned that his portfolio allocations are not the best he can possibly have and he has come to you seeking advice.However, he refuses to reveal any information about precisely which stocks he holds - that would be bad luck.

You look at the investment vehicles offered by your company.Shown in parenthesis are the notes you took at a recent marketing presentation you attended.

Fund 1)US Small Cap Growth Fund (risky, but has high expected returns - all investments are in the US)

Fund 2)US Convertible Bond Fund (mixture of stocks and bonds in the US)

Fund 3)UK Index Fund (diverse mix of stocks in the UK; the correlation between US and UK Indices are about 0.50)

Fund 4)UK Hedge Fund (special strategy fund in UK; high expected returns, but extremely high risk; the correlation between this Fund and UK Index is about 0.50, the correlation between this Fund and the US Index is about 0.0)

Fund 5)US Real Estate Investment Trust (diverse mix of real estate properties located in the US, high expected returns and low risk, but has serious tax consequence-- correlation with the US Index of around 0.25.)

Convince the client to invest in one of these funds (there is only one that makes sense for him).You must provide a good succinct argument (~5 sentences max).