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Analysis: risk parity strategies meet criticism
09 September 2013
Risk parity strategies are being called into question, finds Hardeep Dhillon
Risk parity strategies
Over the past two decades, particularly since the financial market crisis in 2008, risk parity portfolios have generally outperformed equity/bond balanced portfolios in Sharpe ratio terms.
This has led to a slew of firms entering the market, such as Barclays Global Investors, Schroders, Mellon Capital Management and State Street Global Advisors.
Aquila Capital launched the world’s first risk parity strategy to focus solely on fixed income earlier this year in July, while Morningstar reported that risk parity mutual fund assets had risen to $15.1bn by June, up from $73.6m at the end...
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