Alan is an investment analyst working for a fund manager and the fund's flagship portfolio is a global equity portfolio. The portfolio benchmarks against MSCI All World Index, which covers more than 3,000 constituents across 23 developed and 26 developing markets. The fund currently fully replicates the holdings of the benchmark and add tilts to factors that they have high conviction. (i) What is the main drawback with the approach used by the fund to replicate benchmark characteristics? The portfolio manager then asked Alan to propose alternative ways of replicating the benchmark performance to alleviate the drawback of the current method. Alan remembered from his study in the CFA program that he can use a risk model with optimizer to construct an optimized portfolio to track the benchmark. Essentially, he needs to use the optimizer to minimize the tracking error of the portfolio against the benchmark returns. However, he needs to put in constraints in the optimization process. (ii) Discuss two constraints that Alan most likely need to reduce the drawback of the current method? (iii) What is the main drawback of this optimization process compared to the current full replication method