The Importance of Diversification in Portfolios

The more unique sources of return and risk that you can have into the portfolio with some volatility, obviously, the greater the potential free lunch of diversity is. So a big issue with risk parity as we see it out there today is that commodities aren't part of it. There's more bets in the commodity basket than people tend to understand. But once you take into account the diversity, maximize the rebalancing premium, now you have a basket that can provide 3, 3.5% excess return just by thinking about that problem.