%0 Journal Article %A Jorge A. Chan-Lau %T Frontier Equity Markets: Risk Parity Lessons for Asset Allocation %D 2014 %R 10.3905/jai.2014.16.4.028 %J The Journal of Alternative Investments %P 28-36 %V 16 %N 4 %X Are frontier markets the next emerging markets? And if so, should global equity investors include them in their portfolios? From a risk parity perspective, investors can benefit from a frontier markets allocation well in excess of the market weight of the asset class. A risk parity portfolio tends to outperform a market-cap-weighted portfolio during periods of positive equity returns, while delivering comparable returns during crisis periods. Historical data shows that even if portfolio managers cannot follow a risk parity asset allocation strategy due to benchmark tracking considerations, overweighting frontier markets can help them outperform their benchmarks during upside periods without increasing downside risks significantly.TOPICS: Frontier, security analysis and valuation, portfolio construction, performance measurement %U https://jai.pm-research.com/content/iijaltinv/16/4/28.full.pdf