An investing startup managing $10 billion is copying the largest hedge fund in the world

  • Wealthfront, the California investing startup, is adding risk parity to its suite of investment solutions.
  • The portfolio strategy was made famous by Bridgewater Associates, the hedge fund overseeing $US160 billion in assets.

Wealthfront is offering something to its customers that looks a little like the flagship strategy of the largest hedge fund.

The California roboadviser, which manages more than $US10 billion in assets, is adding risk parity, a strategy used in one of the largest funds overseen by Bridgewater Associates, a hedge fund with $US160 billion.

Risk parity is a portfolio strategy that focuses on the allocation of risk, rather than on the allocation of capital. It was made famous by Bridgewater’s All Weather Fund, which launched in 1996.

Risk parity is the newest addition to Wealthfront’s PassivePlus suite of investment solutions. Other features that make up PassivePlus include tax loss harvesting, direct indexing, and smart beta.

“Wealthfront’s PassivePlus marries decades of academic insights with technology to deliver disciplined investment approach that helps our clients achieve their financial goals,” Dr. Jakub Jurek, Wealthfront’s VP of research, said.

“Our launch of Risk Parity demonstrates that even more sophisticated strategies can be deployed via software in a cost-effective manner.”

Wealthfront has been building out its offerings since it landed $US75 million in a fundraising round led by Tiger Global, the New York investment fund. The company announced a feature earlier this year that helps users navigate the home buying process, for instance.

This post has been updated to accurately reflect Bridgewater Associates’ AuM.