Death to the 60/40! Long Live the 60/40!

The traditional 60/40 balanced portfolio is no stranger to coming under fire. Many pundits have decreed the death of the balanced portfolio, arguing that a low yield environment will prove insurmountable and bonds will no longer be able to provide necessary diversification for investor portfolios. This proclamation has yet to be proven correct, and in the investment management industry, being too early is the same thing as being wrong. That being said, is this time different?

Know When to Hold’em, Know When to Fold’em


In the second installment of this blog series on risk parity, we are going to dive into how dynamically adjusting the leverage applied to the strategy can result in increased stability of the portfolio’s return profile. Actively adjusting the amount of leverage applied to the portfolio is how the strategy scales the size of its bets based on changes in market risk.

One Size Doesn’t Fit All: Assessing Suitability in the Context of Uncertainty


This installment in our volatility series will aim to provide a framework that helps to quantify an investor’s ability and willingness to take risk based on constraints and the importance of reaching wealth targets. Additionally, I will finally add varying returns into the analysis to illustrate the impact of the risk and return trade-off. Through simple examples and simulations, I will show that understanding an investor’s total financial picture and applying a probabilistic framework for risk management can help achieve desired outcomes in the face of uncertainty.

Vitamin D: Harvesting the Diversification Premium Through Prudent Leverage


In our latest Insight piece, we explore the parallels between the poker table and the world of investing by studying the nuances of risk and uncertainty. Authors Scott Smith (Managing Partner) and Ben Reeves (Manager, Data Science & Engineering) demonstrate how utilizing a Risk Parity strategy can help investors embrace uncertainty and derive more stable investment outcomes.

Going the Distance: How to Conquer the Challenges Imposed by Liquidity Requirements


In the third installment of our deep dive on volatility, Amin Haji, Manager of Investment Research and Analytics, discusses how portfolio constraints can affect your ability to take risk, focusing on time horizon and liquidity constraints. Using succinct examples, Amin explores whether or not liquidity needs have an effect on how impactful volatility is to your long-term wealth, and how simply having a longer time horizon may not in fact lower your ability to take risk, as conventional investing wisdom would have you believe.

Volatility, A Skewed Reality


Volatility drag – or how volatility exacerbates the divergence between arithmetic returns and geometric returns – is something that is often debated by investment managers and investors alike. A common argument is that while higher volatility increases your downside, it can also increase your potential upside and therefore it may be rational to be risk-seeking to some extent. Another argument is that with a long enough time horizon, investors don’t actually need to worry about volatility, because they can tolerate the ups and downs of the market.

Volatility, What a Drag


Over the past couple of months, investors of all types have likely been caught off guard by global events that caused massive swings in the market value of their portfolio holdings. Unfortunately, some have realized that their investments were far too risky and have lost more than they could tolerate. The old gambler’s adage of not risking more than you are willing to lose holds true for investors as well – but how do we know how much is really at risk?

O Canada! Why We Diversify

The COVID-19 global pandemic is a historic event that has galvanized intergenerational cohorts in the fight against a common enemy. I will not attempt to wax-poetic about the implications this will have on our way of life for when we inevitability get through to the other side of this epidemic, as there are much more qualified experts that can offer better educated opinions on the matter then I can. What I will attempt to do is explore a way to reframe the implications of this health crisis for investors that are dealing with both emotional and financial stress as a result of the pandemic.

ETFs Tested: COVID Free!

There has been a lot of talk over the past few years about how passive investing and the rise of exchange traded funds (ETFs) would be the next financial market bubble that would wreak havoc for investors. There hasn’t been a period of panic in financial markets similar to what occurred in 2008 to test the mettle of ETF products – that is, until the COVID-19 pandemic of 2020.

Even Warren Buffett Can’t Call the Bottom

Markets bounced back sharply last week, providing a much needed respite for equity investors. But, before we get too excited, we need to keep in mind that +20% rallies during bear markets are very common. In fact, the biggest up days in stock markets have historically occurred during major bear markets.