RPAR Risk Parity ETF exceeds USD1bn AUM
Wealth management and consulting firm Advanced Research Investment Solutions' (ARIS) RPAR Risk Parity ETF (RPAR) has gathered more than USD1 billion in assets in less than 13 months since its launch to become one of the largest alternative ETFs in the country.
ARIS recently merged with Evoke Advisors and the combined firm has more than USD17 billion in assets under management.
RPAR seeks equity-like returns over the long run with controlled risk. It attempts to provide investors with lower-cost and tax-efficient access to an investment strategy that has traditionally been used by sophisticated institutional investors. The fund aims to generate positive returns during periods of economic growth, preserve capital during periods of economic contraction, and preserve real rates of return during periods of heightened inflation.
“We launched RPAR because we see far too many investors making the same mistake in their portfolios: poor balance due to overexposure to equities,” says Alex Shahidi, Managing Partner and Co-Founder of ARIS Consulting. “The danger of such investment strategies became even clearer to many investors over the last year due to historic market volatility and turbulent economic and political news,” he said. “Our goal is to provide investors a way to diversify their risk exposure in a tax-efficient and low-cost way, while also capturing market upside.”
2020 presented a real-life stress test for RPAR. During the first quarter, RPAR was down only 4 per cent. By minimising losses during the initial Covid-19 related economic shock, RPAR demonstrated resilience during one of the steepest stock market declines in history. The fund finished the year up over 19 per cent also showing its ability to participate in market rallies.
The fund has a 0.53 per cent gross expense ratio and tracks the Advanced Research Risk Parity Index by diversifying its allocations among four asset classes: equities, commodities, Treasury bonds, and Treasury inflation-protected securities (TIPS). By allocating equal risk to each of these diverse market segments and structuring each to achieve an equity-like return, the balanced mix can earn attractive returns with managed risk over time.
“Our goal is to provide investors with deeply researched and thoughtful approaches to investing,” says ARIS Managing Partner and Co-Founder Damien Bisserier. “We launched RPAR because the strategies that we believe are best suited for navigating exogenous and unexpected risks aren’t easily accessible to individual investors at a reasonable cost.”
Before co-founding ARIS with Shahidi, Bisserier was a Senior Investment Associate at Bridgewater Associates, one of the world’s largest alternative asset management firms renowned for its “All Weather” risk parity strategy. Before ARIS, Shahidi managed institutional client assets at Merrill Lynch.