Video: Risk Parity and a Long-Term Investment Portfolio

In this Bloomberg Business video, Cliff Asness, founder and chief investment officer at AQR Capital Management, fields the question of when he believes that a risk parity weighting approach may yield positive results. Mr. Asness addresses the time factor by saying that he believes the strategy will pay out in the long term, namely in the next ten or twenty years.

Mr. Asness elaborates that a well-balanced portfolio with stocks, bonds, commodities, credit, etc., diversified geographically as well as by risk will outperform in the long term – risk parity is not about what will outperform tomorrow. If investors are looking for short term gains, there are much better strategies such as value, carry, trend, etc., but Mr. Asness considers risk parity a good bet for those looking further ahead into the future.

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