Sat, Feb 6, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Study claims risk parity strategies are becoming more familiar across Europe

Tuesday, December 11, 2012
Opalesque Industry Update - UK and European institutional investors reveal a growing, but in some cases limited familiarity of Risk Parity strategies according to an independent Europewide study, commissioned by Aquila Capital.

About one third of the 255 European institutional investors surveyed, from the UK, the Netherlands, Scandinavia, Switzerland, Germany, Italy, Spain and France, are familiar with the Risk Parity concept. Of those familiar with the concept, only 22% have so far allocated part of their portfolio to Risk Parity strategies and 60% of them have made allocations of under 2.5% to Risk Parity. In the UK, 14% of those aware of Risk Parity use the strategy, all of whom have allocated between 2.5-5% of the portfolio to the concept.

Institutional investors who are invested in Risk Parity strategies envision either growing the allocation (20%) or keeping it the same (80%). 50% of institutional investors who are aware of Risk Parity, but have not yet invested, would consider introducing the approach to their portfolios.

The preference for asset classes to be included in a Risk Parity strategy varies strongly across geographies. The survey does, however, reveal an overall preference for equities, followed by fixed income, interest rates and commodities. These trends are mirrored in the UK market.

Stuart MacDonald, Managing Director at Aquila Capital said: “The findings highlight a growing recognition of the value of Risk Parity strategies. Many investors, however, have not yet grasped their potential as an essential part of a well-constructed institutional portfolio. Diversification is the cornerstone of successful investment, but traditional approaches to capital allocation can create unintended portfolio risks. The challenge is to build greater awareness of the diversification and risk equalisation concepts that support Risk Parity. Risk Parity strategies can combine highly controlled volatility and truly effective diversification with high levels of liquidity, transparency and scalability, without compromising returns."

Press release

bc

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. How Einhorn survived a nightmare year[more]

    From Bloomberg.com: Even when a hedge fund has an awful year, which was the case for David Einhorn's Greenlight Capital, there are lessons to be learned. Many funds would have had a tough time surviving a year like Einhorn experienced in 2015, when all the stars seemed to align against him and Green

  2. Legal - Hedge fund founder wins early release in U.S. insider trading case, Gramercy seeking $1.3 billion from Peru over land-bond dispute[more]

    Hedge fund founder wins early release in U.S. insider trading case From Reuters/Streetinsider.com: Former hedge fund manager Doug Whitman on Tuesday won a reprieve from serving the remainder of his two-year sentence for insider trading after several judges expressed skepticism that his 2

  3. Investing - David Einhorn finds a winner in Michael Kors[more]

    From Thestreetinsider.com: Greenlight Capital hedge fund manger David Einhorn took his lumps in 2015. The fund lost over 20 percent on the year amid bets gone bad being long a plunging SunEdison and short a couple high-flying FANG stocks. However, today Einhorn is again showing his stock picking pro

  4. Investing - Avenue Capital's Marc Lasry: We like European bank loans, Comment: A bunch of hedge fund managers are chasing the 'dream of crushing a major structural problem'[more]

    Avenue Capital's Marc Lasry: We like European bank loans From CNBC.com: European banks are under immense pressure, but at least one prominent hedge fund has found what it thinks is a good opportunity in the wreckage. Marc Lasry, co-founder and chief executive of hedge fund Avenue Capital

  5. Computer-driven hedge funds make money during January’s selloff[more]

    Komfie Manalo, Opalesque Asia: Commodity trading advisers (CTAs) that use computer programs to guide how they trade, made millions of dollars during last month’s market selloff on the back of declining oil prices and global equities and big moves in currencies. Data provider