'Risk budget' touted to help investors avoid the herd
Keep spare risk capacity - rather than running close to limits - to exploit crises, researchers advise
Using fixed risk targets to manage asset allocation may be reassuring to investors, but it means missing opportunities in times of tension, according to new research.
A better approach, argue Edouard Senechal and Brian Singer – respectively a macro analyst and the head of dynamic allocation strategies at investment manager William Blair & Company in London – is to determine expected return and expected risk in real time, and use the ratio between them as a measure of "investment opportunity". As
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