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Wealthfront Inc. said this month it will close its $1.3 billion risk-parity fund, and pensions have also been cutting allocations.
An S&P risk-parity index that targets 12% volatility is up 3% this year, compared with 11% for a Bloomberg index that puts 60% in stocks and 40% in bonds. The S&P 500 is up about 24% through Monday’s close.
The fund’s fees and tickers are not yet listed.
Bridgewater’s Karniol-Tambour and Christopher Ward are responsible for creating the model portfolio, while a team led by SSGA’s James Kramer will handle day-to-day management of the fund.
“The interesting part is State Street is using a model delivery rather than having Bridgewater directly manage the fund — still, that’s more access than 95% of investors have had before,” said Todd Sohn, an ETF strategist at Strategas.
“I wonder if the pushback will be that Bridgewater does not have direct hands on it, but I guess this is as close folks can get for now,” Sohn added.
State Street is the world’s third-largest ETF issuer, with roughly $1.4 trillion under management, data compiled by Bloomberg show.
The firm also filed in September to join forces with Apollo Global Management Inc. on a private credit ETF filing.
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