Risk Parity Portfolios are a family of efficient beta portfolios that allocate market risk equally across asset classes, including stocks, bonds, and commodities. The investment approach for Risk Parity Portfolios is different than traditional asset allocation; it delivers true diversification that limits the impact of losses of individual components to the overall portfolios. Using this approach, Risk Parity Portfolios are expected to generate superior return for a given level of targeted risk. In addition, Risk Parity Portfolios can be combined with alpha sources such as tactical asset allocation and security selection to achieve even higher total return objectives.

Request Paper