Note scratch & links from video are below. Grammar may not be correct.
from fact Sheet: https://www.rparetf.com/rpar/fact-sheet
The fund description instantly reminds me of Ray Dalio’s All Weather fund. Harry Browne’s Permanent Portfolio is also similar.
A risk parity fund with 1.6B AUM (notably high for a small fund issuer), 0.51% Expense Ratio.
Risk parity strategy
What Is Risk Parity
Weights asset classes according historic volatility in return to achieve desired risk/return for the entire portfolio. With volatility / risk ‘controlled’ these strategies typically use leverage to increase returns.
Adds some leverage (20% for PAR)
Uses uses Commodity producer equities instead of commodities
BackTest Against A 40/60 Portfolio and Ray Dalio All Weather portfolio
All observances over back test period of 2007 - 2022
Less Drawdown than 40/60 portfolio
About the same sharp ratio (0.67) as 40/60 portfolio
All Weather portfolio gets more exposure to US STocks
RPAR Allocation has a ‘flat period’ from 2013-2019
How You Could Replicate RPAR With ETFs With 40% Less Fee?
What I Think About The Portfolio
Stocks only get 25% of the fund. They have the highest real return over time of any asset class
It has a high allocation to treasuries at a time when yields are low and interest rates are set to raise
Using commodity producers seems to defeat the purpose of allocating to commodities as the producers are more closely correlated with the stock market
High market tracking variation. Flat from 2013-2018
I don’t really feel the fee is worth it for what they bring to the table .51%
Risk parity strategies like this take a big hair cut off the upside. It’s like going on a 5 mile hike but carry enough gear for 10 days
It’s a classic asset class diversification risk parity strategy (with leverage). It works for a risk adverse investor but consider risk return profile I think most investors would be just as well served with a simple 40/60 portfolio
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