1) The comparison of traditional "60/40" (60% stocks/40% bonds) portfolio and the Risk Parity portfolio with the same volatility. We attach an Excel file with the data and a PNG file with an idea of how to visualise the data (the chart).
The chart should have the following footnotes in small font:
a) 20 years ending 30 November 2018
b) Traditional Portfolio is comprised of 60% U.S. Stocks and 40% Intermediate U.S. Government Bonds
c) Risk Parity is comprised of U.S. Stocks, U.S. Government Bonds and Commodities with the same volatility as the Traditional Portfolio (8,3%).
3) The fact that Risk Parity methodology was created by Bridgewater Associates, the largest hedge fund in the world.
4) The benefits of Risk Parity strategy: (a) higher return to risk ratio than traditional portfolios like 60/40; (b) annual expected return of 10-11%; (c) instant liquidity; (d) relatively short and small drawdowns (i.e. declines in price).
Footnote in small font: With 12% targeted volatility.
This section (benefits) should go in the beginning of the infographic (i.e. "above the fold").
5) The fact that two main goals of any investor is (a) wealth preservation and (b) wealth accumulation. In both of these areas the most important decision an investor makes is asset allocation (i.e. how much money to invest in stocks, bonds and other assets).
6) The fact that stocks, bonds and commodities contribute about the same volatility to the total Risk Parity portfolio volatility. One idea is to use a pie chart divided into 3 equal parts.
7) The fact that Risk Parity portfolio has drawdowns that are shorter and much less severe than stocks during crises. We include Excel spreadsheet with data and PNG chart with illustration idea. In the Great Financial Crisis of 2008 Risk Parity had a peak-to-trough drawdown of 27% and got back to previous all-time-high after 19 months (April 2008 to November 2009). S&P 500 had a peak-to-trough drawdown of 51% and got back to previous all-time-high after 53 months (October 2007 to March 2012).
Footnotes in small font:
Using end of month prices.
Risk Parity strategy has 12% targeted volatility.