Risk Parity Weathers Bond Rout
As bond prices fell this month, a big question on the minds of many hedge fund managers was how risk-parity funds were holding up. Because those vehicles apply hefty amounts of leverage to their bond portfolios, they are seen as especially vulnerable to market sell-offs. And because risk-parity products typically take the form of mutual […]
As bond prices fell this month, a big question on the minds of many hedge fund managers was how risk-parity funds were holding up. Because those vehicles apply hefty amounts of leverage to their bond portfolios, they are seen as especially vulnerable to market sell-offs. And because risk-parity products typically take the form of mutual funds, with substantially lower fees than private funds, many hedge fund managers would like nothing more than to see them stumble when volatility increases — as it did following the Nov. 8 election. Read more from Hedge Fund Alert.