Diversification: The swings and roundabouts
Authors
Lise Renelleau, Director of Managed Volatility Strategies
Ram Rasaratnam, Senior Research Associate
Insight
PDF 1MB 01 March 2015
The drive to explore more efficient equity beta solutions has given rise to a number of different diversification approaches. This paper explores the concept of ‘diversification by number' as a way of dealing with concentration risk. This approach underlies popular weighting schemes like equal-weighting and risk-parity weighting and can give risk to some unexpected side effects.