The most appropriate portfolio for the Analees is Portfolio A. The justification and rationale for Portfolio A is that this portfolio provides a good balance in terms of their return objectives, risk tolerance and constraints. However, the portfolio provides an adequate return of 8.8% versus their return requirement of 6.8%. Portfolio A also provides a sufficient amount of income to meet current income needs while minimizing the effects of inflation.

It is a well diversified portfolio that balances the risks evenly among most asset classes: 55% stocks, 25% bonds, 10% real estate, and 5% each in venture capital and cash. Although this portfolio can meet the needs of the family, tax planning is advised to minimize their level of total tax liability. Such planning must be done in tandem with the investment advisor, Pamela Jaycoo, so as to coordinate construction of the appropriate asset classes.

Portfolio B is inappropriate because it concentrates a higher proportion of assets into venture capital and real estate (combined 60%), traditionally lower liquidity classes and higher levels of volatility. Furthermore, there is a higher concentration of assets allocated to small and international stocks, also asset classes that exhibit higher volatility levels.

Portfolio C is inappropriate because it does not meet their return objectives, and is designed for conservative investors with low risk tolerances. There is a high concentration in bonds (60%), too much concentrated in cash (10%), and the rest evenly distributed among the remaining asset classes