Risk Parity

August 2026

Risk parity is a distinct approach to portfolio construction that differs from traditional capital allocation frameworks.

By altering (i.e., balancing) how risk is distributed across asset classes, it produces portfolio exposures that can behave differently from conventional allocations across a range of market environments. As a result, outcomes may diverge from peer portfolios, particularly over shorter time horizons. For institutional investors, evaluating risk parity involves considerations related to implementation, portfolio fit, and the broader economic environment in which the strategy is deployed.