Vikash Gupta discusses market views in CIO round table

VAR Capital’s Vikash Gupta discusses the firm’s views in the PAM Insight CIO Roundtable on 8th March, 2018.

Vikash said that the lack of focus on market risks concerned him. Referring to the market volatility that occurred at the start of February, Mr Gupta said that his research suggested that it 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.”

He added that these types of funds have grown greatly and if there was another “flash crash” they could cause wider problems. Mr Gupta added this was especially true “on the bonds side” because “they are highly leveraged.”

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Rebalancing and revolution – PAM Insight CIO Roundtable