1. Assume that you have been appointed as the portfolio manager responsible for serving the high net-worth clients at MHS fund. After a lengthy discussion with the management, you have come to a conclusion that the fund currently uses tactical asset allocation to serve the clients.

Figure 5: Integrated Asset Allocation Strategy

You are convinced that the current asset allocation strategy that is used by the fund needs improvement.

Using Figure 5, use your own words to critically evaluate how the integrated asset allocation strategy can be applied in practice and convince the management as to why this strategy is appropriate for high net-worth clients at MHS Fund Management.

Exhibit 11.24 Integrated Asset Allocation C1 Capital Market Conditions 11 Investor's Assets, Liabilities, and Net Worth C2 Prediction Procedure 12 Investor's Risk Tolerance Function C3 Expected Returns, Risks, and Correlations 13 Investor's Risk Tolerance M1 Optimizer M2 Investor's Asset Mix M3 Returns