An absolutely horrible, terrible, no good month for investors of any stripe: stocks falling steadily, bonds in free fall, inflation high and rising. But if there is a bright side for RP, it’s that it did less badly than others, with RP portfolios occupying the top 4 spots for the month and overall.
It was a humbling month for Risk Parity portfolios and a good one for traditional portfolios, as they took the top 3 places. It was a down-then-up month, with equities rising in the past few weeks and bonds, especially Long-term Treasuries, tanking.
Instructive month to understand the value of true diversification. Stocks and bonds were both down in February, but commodities surged, leading to success for more balanced portfolios. Portfolios with concentrated risk in equities struggled, finishing 8th, 9th, and 10th.
So, this is what sequence of returns risk looks (and feels) like! It was an absolutely atrocious months for all asset classes (save one), with heavy losses for all of the sample portfolios, whether benchmark or RP-inspired.
Quarterly Review for October, November, and December, 2021. Strong growth in stocks and commodities in the fourth quarter made for lots of good news at start of 2022. Inflation is high and looks to be strengthening, though.
