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Manager Insights

Risk Parity Makes Sense Now

Manager Insights White Paper Outcome Oriented Alternatives Multi-Asset
July 2020
Risk Parity Makes Sense Now

Authors & Contributors

Rob Croce, Head of Risk Parity & Liquid Alts, discusses the new low-yield world, the potential for “Japanification” in developed markets, and the efficacy of bonds in risk parity portfolios.

Sovereign bonds continue to produce meaningful positive return and negative correlation to risk assets despite headline yields to maturity that are close to zero. Investors seeking to maximize their Sharpe ratio should have a very meaningful allocation to bonds and can obtain it by allocating 10%-20% of their portfolio to risk parity.