(Bloomberg) Risk parity funds, a popular strategy that was battered during the volatility shock that rocked financial markets in February, are still the most vulnerable around, said Paul Britton, founder of Capstone Investment Advisors LLC. “That strategy has been so successful and deserves credit for providing the returns it’s provided, but it’s the weakest hand in the market,” he said in an interview on the sidelines of Wednesday’s Global Volatility Summit in New York. “The strategy has gotten to a size — whether it’s publicly available numbers or what’s embedded within institutions — it’s so enormous that the market’s going to take a run at trying to stress that position.”
Risk Parity Is the Weak Hand in Markets ‘Tethered’ to Volatility
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