MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
|
|
MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Friday, November 8, 2024 A $77B-AUMA CA Firm Will Shutter Its Sole MF The folks at a $77.07-billion-AUMA, 1.06-million-client (as of October 19) roboadvisor are preparing to shut down their sole mutual fund, less than three weeks before what would have been the fund's seventh birthday. On Monday (November 4), the Wealthfront team revealed in a filing that the board of the Two Roads Shared Trust has approved a plan of liquidation for the Wealthfront Risk Parity Fund. Per Wealthfront Strategies' most recent form ADV, filed on October 28 (i.e. one week before the filing about the planned liquidation), the fund has about $1.329 billion in AUM. Its sole share class, W (WFRPX), comes with an expense ratio of 25 basis points. Per this week's filing, the Wealthfront team plans to close the fund to all new investments on December 27, then liquidate the fund on January 3. The fund's inception date was January 22, 2018. Wealthfront Strategies recommended the liquidation, per this week's filing, as being "in the best interests of ... the "Fund" ... and its shareholders." The filing offers no further explanation, though Bloomberg describes the shuttering fund as "a magnet for criticism since it was announced in 2018." A spokesperson for Wealthfront tells Bloomberg that the planned closure is part of an intermittent overall update of Wealthfront's asset allocation recommendations. Palo Alto, California-based Wealthfront Strategies (subsidiary of Wealthfront Corporation and sibling to Wealthfront Advisers, Wealthfront Brokerage, and Wealthfront Software) serves as investment advisor to the Wealthfront Risk Parity Fund. Alex Michalka, senior director of research at Wealthfront Strategies, has PMed the fund since 2019. Bloomberg notes that the fund's strategy "was to mimic the diversified investment style made famous by the billionaire hedge fund manager Ray Dalio." "Risk parity strategies can vary, but the overall idea is to invest across assets based on how volatile each is, often using leverage to optimize returns relative to the risks taken. But the investing style, in one form or another, has often disappointed in recent years, and Wealthfront's version has performed particularly badly," Bloomberg's Sam Potter and Denitsa Tsekova write. "Since inception, the Wealthfront Risk Parity Fund has delivered a loss of 2.2%, according to data compiled by Bloomberg, while the S&P Risk Parity Index gained more than 50%. That compares with a return of about 126% for the S&P 500 Index." "That fund's performance has been terrible,” Jeffrey Ptak, chief ratings officer at Morningstar Research Services, tells Bloomberg. "Probably an example of trying to extrapolate performance of a strategy in one environment (which was pretty benign if you were rebalancing into bonds and were borrowing as rates were grinding lower) to another (which has been far less benign in those ways)." The Wealthfront Risk Parity Fund is a series of Two Roads Shared Trust. The fund's other service providers include: Blank Rome LLP as counsel; Cohen & Company, Ltd. as independent accounting firm; Ultimus Fund Solutions, LLC as transfer agent; Ultimus's Northern Lights Distributors, LLC as distributor; and U.S. Bank, N.A. as custodian. Printed from: MFWire.com/story.asp?s=68144 Copyright 2024, InvestmentWires, Inc. All Rights Reserved |