ReSolve Asset Management and S&P Dow Jones Indices Debut Industry-Leading Risk Parity Index
New index empowers Advisors and Investors to track their performance against a maximally diversified global portfolio.
Toronto, Canada, February 28, 2017 (Newswire.com) - ReSolve Asset Management, a leading investment firm focused on rules-based portfolios, is proud to launch the ReSolve Global Risk Parity Index (ticker: RSRPDH[D1] ). The Index enables investors of all types to compare the effectiveness of their portfolios against the performance of a maximally diversified global portfolio.
“Typical portfolios are overly reliant on domestic equity markets to deliver on client goals,” explains Mike Philbrick, President of ReSolve. “With North American equity and bond valuations near all-time highs, and political risk on the rise everywhere, investors must seek returns from all available sources. This requires a more comprehensive view of diversification.”
According to Mr. Philbrick, over the last century a typical domestic portfolio of 60% stocks and 40% bonds derived 94% of its risk from stocks.
With North American equity and bond valuations near all-time highs, and political risk on the rise everywhere, investors must seek returns from all available sources. This requires a more comprehensive view of diversification.
“We’ll never understand why people call 60/40 a ‘balanced’ portfolio; it’s anything but. It’s basically one huge bet on uninterrupted global growth, benign inflation, and abundant liquidity. History makes a mockery of this assumption.” notes Adam Butler, CEO. “Investors need proven strategies that are designed to thrive in good markets and bad. This can only be achieved through thoughtful, responsive global diversification.”
“It’s unfortunate how quickly people forget the Tech and Housing Bubbles. Consider that 60/40 portfolios typically lost 25% or more in 2008,” adds Managing Director Rodrigo Gordillo. “But that same year the ReSolve Global Risk Parity Index was up 3.2%. Can there be any louder signal as to the power of thoughtful diversification?”
The ReSolve Global Risk Parity Index tracks the performance of an equally risk-weighted allocation to global equities and bonds, real estate, commodity-driven securities (including energy and precious metals), and currencies. The Index targets a volatility of 6% per year, which is less than the historical volatility of benchmark U.S. 10-year Treasury bonds. Yet over the past quarter century it has averaged a 9.5% compound annual return, with no negative calendar years.
The index prioritizes preparation over prediction as the key determinant of long-term investor success. And other industry partners are taking note: Horizons ETFs offers a Global Risk Parity ETF (ticker: HRA) sub-advised by ReSolve, and based on their Index methodology.
Additional Risk Parity Resources:
- To learn more about the complete lineup of ReSolve Global Risk Parity Funds, please visit InvestReSolve.com.
- To learn more about the history and philosophy of risk parity, please visit RiskParity.ca.
- To take a deep dive into risk parity and factor overlays, download our Global Risk Parity Primer.
Source: Resolve Asset Management
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