Fri, Apr 28, 2017
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. Opalesque Exclusive: Ex-Man manager combines sustainable investing with AI/ML[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Dr. Richard Bateson, quant fund manager and physicist, has recently

  2. Other Voices: "Winner-take-all" dynamics and hedge fund investing[more]

    A growing stream of thinking in microeconomics is the concept of "winner-take-all" dynamics. The idea seems simple. A combination of networking economics and classic economies of scale creates situations where there are just a few dominant firms or economic agents who are able to capture significant

  3. Investing - How Chipotle's comeback attracted big data robots and value investors alike[more]

    From Forbes.com: When William Ackman's ailing hedge fund Pershing Square Capital Management bet $1 billion on shares in Chipotle Mexican Grill beginning in July 2016, the stakes couldn't have been higher. Pershing Square was reeling from what would eventually be a near $4 billion loss in drugmaker V

  4. Service Providers - Colemore launches fee tracking service for limited partners[more]

    Following Colmore's successful launch in January 2017, the firm has announced the launch of FAIR.. FAIR is designed to help private equity investors independently validate fees and incentives charged by underlying managers, saving time and providing an extra level of comfort. There is a glob

  5. Regulatory - 'Fist bumps' at hedge funds over Trump's tax plan[more]

    From Reuters.com: U.S. hedge fund managers began warming to President Donald Trump soon after his surprise election ignited a powerful stock market rally. Now, his dramatic tax cut plans give them even more reasons to cheer. Trump, looking to make good on pledges for sweeping tax reform, on Wednesda