Advanced Research Investment Solutions (ARIS), a Los Angeles-based wealth management and consulting firm with $12 billion in assets under management, launched an ETF on Friday that presents a risk parity strategy to investors.
The RPAR Risk Parity ETF (RPAR) will seek to provide investors with low-cost and tax-efficient exposure to a risk parity investing strategy in a single-purchase strategy.
Under increasingly uncertain market conditions across the globe, investors continue to consider their portfolio allocations. By diversifying across market segments that have historically gone up and down in varying economic environments, risk parity strategies aim to provide investors a more consistent return over time. This approach differs from traditional portfolio allocation strategies, which tend to be overly dependent on environments that favor strong equity performance.
“When we look at a typical new client or prospective client’s portfolio, we see the same mistakes repeatedly: overexposure to equity markets and bonds that are highly correlated to equities,” said Alex Shahidi, Partner and Co-Founder of ARIS Consulting. “Looking into the characteristics that different assets exhibit, it becomes clear that many investors are simply not well-diversified. With RPAR, we are excited to deliver a better diversification solution to our clients and investors.”
Extensive Experience Pays Off
ARIS will leverage its extensive experience with risk parity investment strategies to help guide the development and management of RPAR, as the firm currently utilizes this approach for many of its existing clients. Prior to starting ARIS, Co-Founder Damien Bisserier was a Senior Investment Associate at Bridgewater Associates, known for being one of the world’s largest hedge fund managers, and leaders in risk parity.
“Alex and I began ARIS in an effort to provide our clients with a more forward-thinking and educated approach to investing,” said Damien Bisserier. “The current political and economic environment is unprecedented in many ways, exposing more traditional equity-concentrated portfolios to a significant risk of loss. It has always been our aim to help clients achieve their investment goals while substantially minimizing any losses they may experience in a downturn, and we see RPAR as a core part of pursuing these objectives.”
RPAR will seek to track the Advanced Research Risk Parity Index and will invest across multiple asset classes and sectors. At launch, it will be roughly exposed 25% to global equities, 25% to commodities, 35% to long-duration TIPS, and 15% to long duration Treasuries. The fund will rebalance on a quarterly basis and will have a gross expense ratio of 0.53%. Additional information may be found at rparetf.com.
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