Explanation

Allocating a portion of a portfolio to illiquid asset classes is the most passive strategy because:

• It involves a strategic asset allocation decision that doesn't require ongoing active management
• Once the allocation is made, the investor can hold the positions without frequent trading
• This approach captures the illiquidity premium through long-term holding periods

The other options are more active strategies:

• A: Requires active selection and monitoring of specific illiquid securities
• B: Involves dynamic factor timing and active portfolio adjustments
• C: Market making is an extremely active strategy requiring continuous trading and risk management

Passive illiquidity harvesting typically involves accepting illiquidity as a structural feature of certain asset classes (like private equity, real estate, or infrastructure) rather than actively seeking out illiquid opportunities within liquid markets.