Which investment action is appropriate for a CFA charterholder managing a corporate pension plan?

Investing proportionally in various companies while considering diversification is appropriate for a CFA charterholder managing a corporate pension plan because it aligns with the fundamental principles of risk management and portfolio theory. Diversification helps to mitigate risks that can arise from concentrating investments in a single asset or sector. By spreading investments across various companies and asset classes, the portfolio can achieve a balance between risk and return, which is crucial for meeting the long-term funding obligations of a pension plan.

In managing a pension fund, the goal is to ensure sufficient returns to meet future liabilities to retirees while minimizing risks. The diversification strategy allows for greater stability in returns, as the impact of poor performance in any single investment can be offset by stronger performance elsewhere. This prudent approach is aligned with the fiduciary duties of a CFA charterholder, who is expected to act in the best interests of their clients, in this case, the pension plan beneficiaries.

Furthermore, this action adheres to the guidelines for institutional investors, which emphasize the importance of a diversified investment strategy to cushion against market volatility and potential downturns.