Press Release (ePRNews.com) - LONDON - Sep 10, 2018 - VAR Capital’s Vikash Gupta discusses the firm’s views in the PAM Insight CIO Roundtable on 8th March, 2018.
Mr Gupta expressed concern about the lack of focus on market risks. He said his research indicated that the market volatility which occurred at the start of February was triggered by risk parity funds unwinding their positions.
“Risk parity funds have enjoyed low volatility for some time,” he said. “If there is some volatility and they start unwinding their positions there is a danger such as we saw earlier in February. After a three percent drop the risk parity funds starting to unwind positions and this pushed prices further down. There was no cause of the crash other than the unwinding of positions.”
Mr Gupta also added if another “flash crash” happened, then wider problems could occur since these types of funds have grown greatly. He explained that this would be especially true “on the bonds side” because “they are highly leveraged.” Source :