Daily ETF Watch: New Risk-Parity Fund

SSgA is looking to market an asset allocation ETF to risk-averse investors.

Reviewed by: Hung Tran
Edited by: Hung Tran

SSgA is looking to market an asset allocation ETF to risk-averse investors.

State Street Global Advisors has filed regulatory paperwork to market a broadly diversified actively managed ETF that promises capital appreciation through a risk-focused asset allocation strategy.

The SPDR SSgA Risk Parity ETF will invest in everything from equities to bonds to commodities and derivatives, but it will determine those allocations based on a “risk parity” approach as measured by forecasted volatility, estimated potential loss and other proprietary measures, according to the filing.

The filing comes at a time when market observers are calling for a pullback of the S&P 500 Index on the heels of its 32.0 percent surge last year. The Federal Reserve’s continuing tapering of its bond-buying program and a slowdown in China also have investors on edge in search of safe havens and yields.

The proposed ETF is part of a “master-feeder” structure whereby it will invest all of its assets in a corresponding “master fund,” which includes a separate open-end mutual fund that has the same strategy as the ETF.

Asset allocation ETFs often turn to broadly diversified exposure schemes to capture growth and income in the long run. Such strategies are attractive to more risk-averse investors and have gained favor in the aftermath of the 2008 credit crisis that sent the equities market into a tailspin and the economy into a deep recession.

No ticker or fees were disclosed.

SSgA’s filing is similar to the one made by Global X two years ago. That proposed ETF, dubbed the Global X Risk Parity ETF, hasn’t seen the light of day.


Hung Tran is a former staff writer for etf.com.