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Opinion

Risk parity – the benefits of a conditional approach

Risk parity is a meaningful and robust approach for building well-diversified portfolios, but it relies on historical volatility estimates, which penalises upside risk as well as downside risk and leads to a massive overweighting of bonds versus equities, even in a low yield environment. The authors from EDHEC Risk-Institute build the case for an alternative […]
Analysis

Is the Great Rotation passing pension funds by?

The prospect of a seismic shift from bond to equity investments looks set to pass most of the world’s pension funds by, argue experts. The concept of a ‘Great Rotation’ rose to prominence following its use by Bank of America Merrill Lynch in October. It argued in a note that “the era of bond outperformance […]
Opinion

Will infrastructure ever find wings?

It’s difficult to ignore the clamour around infrastructure investment, the asset class of the moment. Lloyds TSB and the London Pensions Fund Authority recently joined founder members of the Pensions Infrastructure Platform, PIP, a government initiative to encourage pension funds to invest more in infrastructure. The Universities Superannuation Pension Scheme, USS, just increased its allocation […]