Equitable Investors Risk-Parity Core Strategy

A diversified, multi-asset Managed Account offering for wholesale investors only.

Seeking a total return through exposure to multiple asset classes over the medium-to-long term.

The Equitable Investors Risk-Parity Core Strategy seeks to balance the allocation of risk across major asset classes: Fixed Income, Global Equities, Australian Equities, Real Estate & Commodities (including gold).

Research shows that historically this approach has performed more consistently across changing market and economic environments.

This strategy is implemented primarily through ASX-listed Exchange Traded Funds (ETFs).

March Quarter 2019: Higher risk asset classes performed strongly in the period with double-digit gains across our proxies for real estate, global equities and Australian equities. The Risk-Parity Model returned 6.15% (before fees and expenses), a rate of return we consider unsustainable.

In order to receive an Information Memorandum, please fill in the request form below - or contact us.

RISK PARITY

This strategy focuses on diversifying risk, which we primarily measure using the standard deviation of historical market prices, rather than attempting the unlikely feat of consistently forecasting returns for broad, diversified asset classes. Risk parity seeks to equalise the risk contribution from each underlying asset class within a portfolio.

This approach can generate “alpha” (excess returns) from two sources:

  • Risk-based allocations allow managers to avoid over-allocating their risk budget to a specific, risky asset class; &
  • Rebalancing of the portfolio to account for changes in asset class volatility means the strategy will increase its allocation to asset classes that have declining volatility.


PORTFOLIO WEIGHTS V RISK EXPOSURE UNDER RISK PARITY APPROACH

For illustrative purposes only, risk exposure based on weighted historical standard deviation


CORE AND SATELLITE

Investors can build portfolios that reflect their preferences for risk and return objectives using separate components: “Core” low cost, index or rules-based investments offering diversified, broad exposure to markets; with “Satellite” investment strategies that cost more to implement and offer different risk/return exposures that compliment or enhance the overall portfolio.

Equitable Investors has developed Risk-Parity Core as a “core” solution for investors who are already exposed or are seeking exposure to Equitable’s more aggressive “satellite” strategies such as the Equitable Investors Dragonfly Fund (or with exposure to other satellite strategies managed elsewhere).

CORE AND SATELLITE CONCEPT

PERIODIC REPORTS

Quarterly - Mar 2019

Equitable Investors Pty Ltd is licensed as an Australian Financial Services Licensee (AFSL No. 505824)