Risk Parity Radio Episode 480: Tail Risk Strategies, Better Approaches Using Diversification And Who To Learn That From, Fund Taxonomy, And Portfolio Reviews As Of January 16, 2026
18 snips
Jan 17, 2026 The conversation dives into using tail-hedged ETFs for retirement, highlighting why they may underperform long-term bonds. Strategies for practical diversification and the value tilt as a remedy for growth risk are explored. The importance of understanding Treasury correlations and the four-quadrant framework for asset performance is emphasized. Suggestions for learning from experienced professionals like Bob Elliott are shared, along with practical rules for portfolio design. Weekly portfolio reviews round out the discussion with insights on market trends.
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Don't Use Constant Tail-Hedge ETFs
- Avoid constant allocations to tail-hedged ETFs like SPD or SPYC because they carry a persistent negative expectation.
- Prefer assets with positive expected returns for long-term retirement portfolios to avoid steady performance drag.
Tilt Equities Toward Value
- Do add a value tilt (especially small-cap value) to your equity sleeve to provide downside resilience vs growth-heavy indexes.
- Use value allocations to reduce volatility in downturns and improve long-term outcomes.
Treasuries Are Recession Insurance
- Long-term Treasuries act as recession insurance, not return engines, because they reliably rise when stocks fall during recessions.
- Measure correlations over recession-length periods (1–2 years), not multi-year averages, to assess hedge effectiveness.
