Risk-parity funds debuted in 2009 & have attracted $30
billion in assets, $16 billion in 2013
Funds are designed to mitigate risk & earn modest gains
as opposed to high-risk, high-yield funds
Assets are deployed to equalize risk between stocks, bonds,
and commodities.
Index funds were once a novelty, but pioneers like Vanguard
500 brought about a new standard for low costs, tax efficiency and solid
performance. Target-date funds, too, were once the next big thing, but losses
as high as 45% during the 2008 crash gave the category a black eye.
The latest contender to be a better mousetrap is known as
the risk-parity fund. Just four years after their debut, the new breed of funds
has already attracted nearly $30 billion in assets—$16 billion of that in the
past year alone, according to Lipper….
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