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Perspective

Putting Parity Performance Into Perspective

Cliff discusses the blame placed on risk parity for having caused the market’s August sell-off. Critics made a silly choice to go all tin-foil-hat instead of just doing what people usually do—attack recent performance.

Perspective

Risk Parity: The Dog That Did Not Bite

Commentators are blaming risk parity as a driving force behind August's equity market volatility. We think this is short-term silliness, and explain why we believe risk parity isn't the cause.

Perspective

Risk Parity Is Even Better Than We Thought

It’s not all or nothing when it comes to risk parity. Investors typically think they should be all 60/40 or all risk parity, but we think there's merit in adding risk parity to an existing 60/40 portfolio.

Alternative Thinking

Why Do Most Investors Choose Concentration Over Leverage?

Return-seeking investors must take risks—the question is which to take and to understand the tradeoffs involved. Most investors choose concentration risk, but we present arguments for a different approach.

Journal Article

The Pitfalls of Leveraged and Inverse ETFs

As market volatility reaches historic highs, investors have responded in various ways, including investing in funds that aim to deliver returns that are either a positive or inverse multiple of a stated index.

Journal Article

Leveraged Exchange-Traded Funds: Admissible Leverage and Risk Horizon

In view of the increasing popularity of exchange-traded funds and their leveraged counterparts, the authors assert that it is important for investors to better evaluate the risk involved.

Perspective

Risk Parity: Why We Lever

The role of leverage in risk parity is often misunderstood. For risk parity investors, there may be benefits to using modest leverage—it helps them build a more diversified, more balanced, and potentially higher-return-for-the-risk-taken portfolio.

Perspective

Yes, Lever, but With Care

Conventional wisdom holds that sensible investors avoid leverage. Cliff Asness argues that, if prudently employed, portfolio leverage can be beneficial in modest doses, with proper concern for its dangers.

Trade Publication

Where the Wild Things Aren't: Using Derivatives and Leverage to Improve Portfolio Performance

In the current world of modest risk premia, investors face a choice to limit their investment options, or diversify and build more stable portfolios.