Swing Dance
Another pool of untapped buyers are risk-parity managers, who weight assets by their risk and oversee around $200 billion, according to Wells Fargo estimates. However, these funds typically look at longer-term measures, meaning they may be slower to react.
“Cross-asset volatility is now falling, and fixed income has been negatively correlated with equities,” the Deutsche Bank strategists said in a note. “If these conditions hold, we would expect risk-parity managers to start adding risk in both asset classes.”
This article was provided by Bloomberg News.