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

The Fordhart portfolio has a market value of $2 billion. After his annual meeting with its investment committee, DuBord notes the following points:

DuBord instructs his second junior analyst to formulate new allocations for Fordhart. This analyst proposes the allocation presented in Exhibit 2.

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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Fordhart 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 that DuBord review the CFQ Private Equity Fund as a potential new investment. Enrollment is strong and growing, leading to increased operating revenues from tuition. A recent legal settlement eliminated an annual obligation of $50 million from the portfolio to support a biodigester used in the university's Center for Renewable Energy.