Risk Parity - A Primer
The key to successful long-term investing is managing risk. Risk parity is a meaningful tool for the investor to manage the portfolio’s return profile. Risk management is a critical concern in an environment of low interest rates and highly correlated equity markets. The asset allocation process is long, arduous, and requires experienced professionals using sophisticated analytical tools to ensure value to the portfolio, particularly for the highly uncertain return expectations. Risk parity overcomes these barriers for the investor.