Tue, Oct 21, 2014
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   |   

Banner

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. Opalesque Exclusive: What's next for trend followers?[more]

    Bailey McCann, Opalesque New York: New research out from Ibbotson touches on a key debate happening among investors and fund managers, specifically whether long term trend followers can survive in the new

  2. Commodities - Oil wreaking havoc on small-cap energy stocks sliding 36%[more]

    From Bloomberg.com: Owning almost anything in the U.S. stock market has been a losing proposition since September. Owning smaller energy companies has been a catastrophe. Hercules Offshore Inc. and Resolute Energy Corp. are among 19 oil-and-gas equities in the Russell 2000 Index that lost more than

  3. Investing - Hedge funds favor equity long/short, Strategic bond managers hedge against further high yield sell-off[more]

    Hedge funds favor equity long/short From Securitieslendingtimes.com: Equity long/short strategies will generate good returns for hedge funds in the future, according to a panel at this year’s Risk Management Association Conference on Securities Lending in Naples, Florida. Panellists Sand

  4. Legal - Ex-hedge fund analyst weeps as judge hands down 5 year sentence, Former Columbus investment manager Steven P. Moore indicted on theft charges, SEBI confirms ban for Hong Kong hedge fund, SEC announces enforcement action against compliance officer[more]

    Ex-hedge fund analyst weeps as judge hands down 5 year sentence From Hereisthecity.com: An ex-hedge fund analyst was sentenced to 5 years in prison for his role in insider-trading scheme. The New York Post reports that former hedge fund analyst Matthew Teeple was sentenced Thursday to fiv

  5. Sparx optimistic about outlook for Japan[more]

    Benedicte Gravrand, Opalesque Geneva: According to SPARX, there are causes to be optimistic about the outlook for the Japanese market and the country's economy in general. Sparx Asset Management is a Tokyo-based asset manager, part of