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Alternative Market Briefing

Now is a good time to buy protection cheaply in the options market

Thursday, July 24, 2014

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Patrick Rudden
Benedicte Gravrand, Opalesque Geneva:

Investors are showing an increased interest in risk parity funds and strategies, Opalesque reported last year. Risk parity strategies have their roots in some of the biggest funds out there including Bridgewater.

"Risk parity has been around for a long time and it’s a simple idea," says Patrick Rudden.

Rudden is co-manager of the Dynamic Diversified Portfolio and International Head of Multi-Asset Solutions at AllianceBernstein, a global investment management company. He has published numerous articles and research papers about value investing, asset allocation and risk management. He shares his research findings and his investment outlook with Sona Blessing in a recent Opalesque Radio interview.

The idea of risk parity, he continues, is that if you put half your money in equities, the other half in bonds, you might think you are balanced. But equities are much riskier than bonds. Risk parity tries to have a more balanced exposure in the risk space. In order to do that, one can leverage up the bonds to get to a similar risk level to equities, and lever down more volatile assets. The aim is to have a balanced exposure to growth assets......................

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