Risk parity: making the most when markets give you the least

AQR's case is that investors in balanced funds are more exposed to risk than they might think

Thursday 19 November 2015 at 14:30

Over the past decade, AQR has developed its risk-parity multi-strategy funds by arguing that investors in balanced funds are more exposed to risk than they might think.

It says a balanced portfolio's 60% exposure to equities, in terms of value, could amount to a 90% exposure to equity risk after taking account of the traditional higher volatility of stocks. A similar weighting in bonds would expose investors to less risk of losing money, over time.