INSIGHTS

RISK MITIGATION IS RISK MANAGEMENT

Max Darnell
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May 21, 2020

“Risk mitigation is risk management, and there is no point in time when we should stop managing our risks.” - Max Darnell

Max recently participated in a panel discussion sponsored by Pension Bridge, where he shared his thoughts on recent trends in the marketplace and how allocators can adjust their portfolios going forward. Below are key points from his contribution, as well as the link to the recorded discussion.

  • Good news: risk-mitigation strategies have generally helped during the recent spike in market volatility – from risk parity to global macro, tactical asset allocation, uncorrelated strategies, as well as explicit tail risk hedging strategies.
  • While it is too expensive now, post-turbulence, to add explicit tail risk hedging strategies, truly uncorrelated strategies don’t suffer from the same problem. They have worked, and they tend to love the kind of heightened volatility we seem bound to experience going forward.
  • If there’s one meaningful way we should break the mold (where possible) now, it would be to reduce risk through leverage. This means maintaining exposure to the upside with current asset allocations, while building risk mitigating exposures and risk mitigating strategies on top to reduce total fund risk.
  • CLICK HERE to view the recorded discussion.



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