Investors typically seek compensation for taking on risk; as a result, all asset classes that are perceived to bear risk must offer an associated risk premium. Risk Parity is a methodology that aims to balance risk exposures in a given portfolio in an optimal fashion, so as to avoid risk concentration – be it across asset classes, or within asset class. The risk parity approach may be applied in a multi-asset class portfolio that has exposure to equities, bonds, commodities and other inflation-hedging instruments, as well as within certain stand-alone asset classes such as Diversified Risk Equity and Diversified Risk Commodities.
Risk Parity Multi-Asset
Risk Parity Multi-Asset Plus
China Risk Parity
Diversified Risk Emerging Market Equity
Diversified Risk Global Equity
Diversified Risk International Equity
Diversified Risk US Equity
Diversified Risk Commodities
Diversified factor premia strategies
The Diversified Factor Premia strategy’s goal is to generate attractive, absolute returns through exposure to a suite of diversified sources of factor-based risk premia. The returns from these sources of factor premia are generated within a broad array of capital markets and include value, momentum, and macroeconomic-oriented factors. The portfolio’s exposures are balanced across sources of factor risk premia to generate more stable returns that are generally uncorrelated with market risk premia. PanAgora believes that balancing risk across complementary sources of risk premia will allow the portfolio to generate positive, absolute returns under a variety of market conditions.
PanAgora’s Diversified Factor Premia investment approach is highly flexible in nature and can be run at a wide range of volatility levels.
The Managed Futures strategy trades across commodities, equity indices, sovereign bonds and developed and emerging markets currencies. The strategy utilizes a rules-based trend following algorithm and PanAgora’s Risk Parity portfolio construction approach in order to harvest trending behaviors in these markets. The investment process is systematic in nature and gains portfolio exposure through long and short positions using futures and forward contracts. The Managed Futures strategy ultimately seeks to create long-term wealth accumulation using well-proven and diversified sources of absolute return.
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