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How to Combine Alternative Strategies

Risk parity versus equal-weight

Nicolas Rabener
10 min read
28 Jul 2025

SUMMARY

  • Equal-weighting and risk parity are both reasonable weighting methodologies for alternatives
  • This analysis does not show a clearly superior method
  • Equal-weighting may be more robust out-of-sample

INTRODUCTION

Since 2017, we’ve published dozens of research articles on alternative investment strategies and found that most fail to deliver meaningful value to investors. Many simply represent diluted equity exposure, others are just money pits. A prime example is long-short equity, where the return profile of most funds can be closely replicated within seconds by combining allocations to the S&P 500 and cash (read Are Liquid Alts more than Diluted Equity Funds?

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