In Hossein Kazemi’s Editor’s Letter “Risk Parity and Volatility Targeting Strategies: Recent Performance,” he highlights two volatility-based strategies that have recently increased in popularity. They are not active allocation strategies but are very different from traditional market capitalization weighting for strategic allocation. Recent news reports have speculated that fund flows to these volatility-based strategies have caused volatility to spike and equity prices to drop. Why are these strategies expected to work? How do they work? Do they impact the market? How have they performed and how are they expected to perform in the future? Read the full summary below.
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