TY - JOUR T1 - Frontier Equity Markets: <em>Risk Parity Lessons for Asset Allocation</em> JF - The Journal of Alternative Investments SP - 28 LP - 36 DO - 10.3905/jai.2014.16.4.028 VL - 16 IS - 4 AU - Jorge A. Chan-Lau Y1 - 2014/03/31 UR - https://pm-research.com/content/16/4/28.abstract N2 - Are frontier markets the next emerging markets? And if so, should global equity investors include them in their portfolios? From a risk parity perspective, investors can benefit from a frontier markets allocation well in excess of the market weight of the asset class. A risk parity portfolio tends to outperform a market-cap-weighted portfolio during periods of positive equity returns, while delivering comparable returns during crisis periods. Historical data shows that even if portfolio managers cannot follow a risk parity asset allocation strategy due to benchmark tracking considerations, overweighting frontier markets can help them outperform their benchmarks during upside periods without increasing downside risks significantly.TOPICS: Frontier, security analysis and valuation, portfolio construction, performance measurement ER -