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S&P Dow Jones Indices Constructs Risk Parity Indices

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S&P Dow Jones Indices, a division of S&P Global, launched a set of risk parity indices that are aimed to replicate a multi-asset risk parity strategy. The company is calling them the S&P Risk Parity Indices – with three indices being introduced: S&P Risk Parity Index – 10% Target Volatility, S&P Risk Parity Index – 12% Target Volatility, and S&P Risk Parity Index – 15% Target Volatility. S&P Dow Jones Indices worked with MSR Indices, part of MSR Investments, on building these indices. Before these indices, many asset managers used the traditional benchmark of a 60/40 portfolio of stocks and bonds to measure the relative performance of risk parity funds.

The introduction of these indices could allow lower cost risk parity options for practitioners of this strategy. Many asset managers that sell risk parity products like AQR and Bridgewater Associates often charge fees a bit higher than traditional equity products for these types of services.

“Through the S&P Risk Parity Indices, risk parity funds and its managers for the first time can compare performance to a benchmark that embodies the risk/return and asset allocation characteristics of this frequently-used strategy,” said Vinit Srivastava, Managing Director, S&P Dow Jones Indices, in a press release.

Funds and Ownership, KKR Partners with Shinhan Financial

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South Korean financial giant Shinhan Financial Group Co., Ltd. reached a preliminary agreement with KKR & Co. to form a series of global buyout funds that could raise up to 5 trillion KRW. KKR and Shinhan signed a Memorandum of Understanding (MoU) in Seoul in early October. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Norwegian Government Recommends SWF Remains at Central Bank

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There was speculation that Norway Government Pension Fund Global (GPFG) could be managed outside of Norges Bank. The Norwegian government shot down this idea and recommended Norway’s GPFG remain in Norges Bank. This recommendation came in the form of a white paper submitted to the Norwegian Parliament, Stortinget.

Norway’s Minister of Finance Siv Jensen, commented in a press release, “The Government proposes a new and modernised governance structure for Norges Bank. Moving forward, this new structure lays the foundations for the sound management of the central bank and of the GPFG.”

Some Central Bank Recommendations

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Invesco Buys OppenheimerFunds for $5.7 Billion

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Invesco Ltd. signed a deal to acquire OppenheimerFunds, Inc. from Massachusetts Mutual Life Insurance Company (MassMutual). In turn, MassMutual and the OppenheimerFunds employee shareholders will receive a combination of common and preferred equity consideration, and MassMutual will become a significant shareholder in Invesco, with an approximate 15.5% stake. This strategic transaction will bring Invesco’s total assets under management (AUM) to more than US$ 1.2 trillion. The transaction is expected to close in the second quarter of 2019, pending necessary regulatory and other third-party approvals. The transaction gives Invesco access to more third-party distribution platforms.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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