Bleh, I was torn between A and C and I went with A. My reasoning is that when you’re dealing with a liability, your primary goal is to make sure you have enough money to fund the liability. You really can’t risk going below the liability. At least with a bond index, you CAN risk going below the index as long as your risk-adjusted ex-ante expected return is higher than that of the bond index. Since I don’t know if we can necessarily say the liability requires more risk aversion than the index, I went with A: go for risk-adjusted returns.
B seems to suggest ignoring risk, whereas A seems like the same as B but better because it involves “risk-adjusted” return instead of just return.