Wealthfront Launches RiskParity
Today, Wealthfront launched Risk Parity, the latest addition to PassivePlusⓇ, the company's signature suite of investment features. PassivePlusrepresents Wealthfront's collection of academically proven, time tested rules-based strategies that seek to increase clients' net of fee, after-tax returns, while maintaining their same level of risk. Risk Parity joins Wealthfront's previous PassivePlus features, daily tax-loss harvesting, stock-level tax-loss harvesting and Smart Beta as impactful capabilities.
"Wealthfront's PassivePlus marries decades of academic insights with technology to deliver a disciplined investment approach that helps our clients achieve their financial goals," said Dr. Jakub Jurek, Wealthfront's Vice President of Research. "Our launch of Risk Parity demonstrates that even the most sophisticated strategies can be deployed via software in a cost-effective manner."
Bridgewater Associates built the world's largest hedge fund, aided by its creation of the risk parity strategy in its All Weather Fund, which launched in 1996. The strategy gained momentum based on its strong relative performance during the 2008 financial crisis. But the firm's account minimum of $100 million limited the availability of its risk parity strategy to the ultra-wealthy and institutional investors. True to form, Wealthfront's PhDs and engineers developed a software-based approach designed to replicate Bridgewater's risk parity strategy, while keeping costs to the investor as low as possible.
"Most academics appreciate the benefits that broad diversification can bring, yet time and time again most investors fail to take advantage of the full benefit," said Dr. Burton Malkiel, Wealthfront's Chief Investment Officer and renowned economist. "The addition of Risk Parity takes diversification to the next level with a cost-effective, rules-based strategy. It aims to offer our clients more consistent returns during uncertain economic times. I am proud we've been able to offer it at a low cost to our clients."
Wealthfront is proud to be the only automated advisor to offer comprehensive financial planning, its unique suite of PassivePlus® investment features and banking-related services all through the convenience of a mobile app. The company offers each service for a fraction of what the traditional industry charges and intends to expand on these areas to deliver even more value to their clients over time. This announcement comes on the heels of Wealthfront's recent $75 million capital raise, bringing in Tiger Global Management as a new lead investor and the addition to home planning for Path. Wealthfront doubled its assets under management in 2017 and currently manages over $10 billion.