AQR Capital Management announced today the introduction of new unit class within the AQR Global Risk Premium Trust designed to make that investment strategy accessible to a larger number of Australian investors.
The new Class 1F units come with additional disclosure and a smaller minimum investment size (A$25,000). The changes make them suitable for use on Australian platforms and for distribution through financial advisors or directly to investors.
The Trust, which is domiciled and registered in Australia, was launched to institutional investors in November 2011. It has attracted strong institutional interest, and currently has more than A$950 million of assets under management (as at April 30, 2013).
The Trust’s objective is to produce attractive risk-adjusted returns while diversifying investors’ exposure to equity risk. It invests in a globally diversified portfolio of equities, fixed income and commodities, allocating its investment-risk budget evenly across asset classes and actively managing its portfolio to maintain that balance through the market cycle.
“Our Global Risk Premium strategy utilizes a risk-balanced approach to portfolio construction, which aims to produce attractive risk-adjusted returns through exposures to a broad range of asset classes,” said Jeff Dunn, an AQR Principal who runs the firm’s Australasian business.
Risk-balanced funds seek to produce attractive risk-adjusted returns by investing in a globally diversified portfolio of equities, fixed income and commodities. Broadly defined, risk-balanced funds allocate capital based on risks rather than asset classes. A typical risk-balanced portfolio begins with less exposure to equities relative to traditional portfolios and invests more in other asset classes. As a result, its risk budget is not concentrated in equities, but spread more evenly across other assets.
AQR currently manages more than US$25 billion globally in the Global Risk Premium strategy, which it has managed in offshore vehicles since early 2006.
“The strategy has generated relatively high risk-adjusted returns over a period that has been challenging for investors,” Dunn said. “The strategy’s live performance since inception clearly demonstrates the value of diversifying away from traditional equity dominated portfolios.”