Risk Parity Radio
Episode 387: Reprising The Big Mo, Mid-caps, Stuff On The Website And Portfolio Reviews As Of December 13, 2024
Dec 15, 2024
Dive into the intriguing world of investment strategies, where the power of momentum factors is thoroughly examined. Discover how mid-cap stocks play a pivotal role in diversification and why understanding them is crucial. The hosts also share personal anecdotes, making investment discussions lively and relatable. With insights into portfolio performance and the effectiveness of different funds, listeners will gain valuable perspectives on transforming their investment approach.
32:25
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Quick takeaways
- Incorporating the momentum factor into a portfolio can enhance returns but its effectiveness varies across different economic conditions.
- Mid-cap stocks provide general market exposure without significant diversification benefits compared to more distinct asset classes like small or large caps.
Deep dives
Momentum Factor and Its Application
Incorporating the momentum factor into a risk parity portfolio raises questions regarding its effectiveness in enhancing returns and reducing volatility. The host mentions that while momentum can be useful in certain scenarios, it’s challenging to determine its performance across varying economic environments. An analysis indicates that momentum-focused funds often underperform traditional large cap growth funds, suggesting that the expected benefits may not justify their inclusion. However, adding momentum to small cap value funds shows promise, as evidenced by comparative analyses that reveal better performance since 2005.
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