RT Journal Article SR Electronic T1 The Resale Value of Risk-Parity Equity Portfolios JF The Journal of Portfolio Management FD Institutional Investor Journals SP 23 OP 32 DO 10.3905/jpm.2015.41.2.023 VO 41 IS 2 A1 Eric H. Sorensen A1 Nicholas F. Alonso YR 2015 UL https://pm-research.com/content/41/2/23.abstract AB This article examines the application of risk parity to fully diversify an equity portfolio. It presents wealth accumulation in a stochastic dominance framework, tested over increasing investment horizons. The portfolio construction algorithms consider sector, country, and stocks in achieving an alternative to capitalization-weighted approaches. Risk parity is dominant over 75% of the historical periods for any two-year horizon and is dominant in all cases after six-year horizons. It achieves dominance over capitalization-weighted indices over shorter horizons during periods of higher market volatility, periods of higher inflation, and periods with steep yield curves.TOPICS: Equity portfolio management, commodities, analysis of individual factors/risk premia