“Selection/non-reporting bias, survivorship bias, and backfill or instant history bias can all serve to artificially inflate index returns, which are often higher for non-investable than for investable hedge fund indices,” explains Hamlin Lovell, in his feature article on the launch of MPI’s Hedge Fund Indices business. “According to MPI, these biases can be overcome by building a representative index comprised of a selective group of the largest funds.” Read the article here.
The Hedge Fund Journal
Risk parity implementation starts from the observation that while a traditional 60/40 stock/bond portfolio appears well diversified, equities are a lot more volatile than fixed income securities. Follow the article on The HedgeFund Journal to learn more.