Wealthfront set to be the first robo to offer its own mutual fund
In the past two years, mutual fund giants have crashed the digital wealth management space, seeing it as a new avenue for distribution.
Now Wealthfront wants to return the favor, filing with the SEC on Wednesday for a mutual fund offering of its own. If approved, it would make Wealthfront the first major independent robo to offer its own fund.
Dubbed the Wealthfront Risk Parity Fund, the derivatives fund will invest in global developed and emerging market equities, global developed and emerging markets fixed income, real estate investment trusts and commodities, according to the filing.
The fund will carry a 51-basis point expense ratio. It will be made available to Wealthfront investors with no contribution limitations and to institutional investors with a $5 million investment minimum.
Jakub Jurek, Wealthfront’s vice president of research, and Celine Sun, Wealthfront’s director of research, are listed as the fund’s portfolio managers.
The SEC filing notes that “the fund is not suitable for all investors,” but instead only for those “who (a) understand the risks associated with the use of derivatives, (b) are willing to assume a high degree of risk, and (c) intend to actively monitor and manage their investments in the fund.”
Despite being steadfast in its goal of remaining digital-only (Wealthfront CEO Andy Rachleff has regularly questioned the efficacy of human advisors), the Silicon Valley-based firm has taken pages from Wall Street’s playbook.
The automated investment firm offers securities-based lending to investors with at least $100,000 in their accounts, at annual rates of 3.25% to 4.5%. Earlier this year, it also launched a stock selling feature for clients who receive publicly traded stock from their firms as part of their compensation. That feature, however, has been discontinued.