History and Invention of Risk Parity Style Investing

The first Risk Parity Style portfolio was believed to be invented by Ray Dalio and his firm, Bridgewater, in the 1980s and early 1990s. They aimed to create a portfolio that would perform well across all economic environments without the need to predict future conditions. Using a passive strategy, they developed the All Weather Portfolio, which balanced equities with long-duration bonds to mitigate risk and provide stability. By analyzing data with newly available tools like Microsoft Excel, they devised a method to match assets with specific economic conditions for optimal performance.