Discuss two reasons why the proposed asset allocation is inappropriate for Fordhart.

Mark DuBord, a financial adviser, works with two university foundations, the Titan State Foundation (Titan) and the Fordhart University Foundation (Fordhart). He meets with each university foundation investment committee annually to review fund objectives and constraints.
Titan’s portfolio has a market value of $10 million. After his annual meeting with its investment committee, DuBord notes the following points:

DuBord supervises two junior analysts and instructs one to formulate new allocations for Titan. This analyst proposes the allocation presented in Exhibit 1.

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Titan must spend 3% of its beginning-of-the-year asset value annually to meet legal obligations. The investment committee seeks exposure to private equity investments and requests DuBord's review of the Sun-Fin Private Equity Fund as a potential new investment. A recent declining trend in enrollment is expected to continue. This is a concern because it has led to a loss of operating revenue from tuition. Regulatory sanctions and penalties are likely to result in lower donations over the next five years.