AQR Capital Management's Global Risk Premium Trust has reached over $500 million in funds invested by Australian institutional clients, including a recently funded allocation from ipac Asset Management, since its launch late last year.
The fund aims to decrease the importance of equities and increase the importance of other allocations.
AQR principal Jeff Dunn said there had always been a demand for the institutional fund in the United States, but interest was starting to grow from Australian investors.
Dunn said Australian superannuation funds currently using the trust were structuring portfolios for their member base to achieve risk parity portfolios.
"It's part of a larger solution they're implementing to reduce the dominance of equities," he said.
"There are other ways of dealing with it, but this is one approach."
Due to a decade of reasonable equity returns, the Australian environment had not been as heavily affected as elsewhere in the world, he said.
"From an Australian investor's perspective, people aren't spending as much time worrying about the equity dominance in their portfolio, but that has started to change now," he said.
"We're seeing more broad interest in these types of portfolios and you can see this as there's a lot more providers in this space coming in."
The fund is structured as an optimal portfolio at all risk levels, in other words, the choice of asset allocation is distinct from the choice of risk.
"An aggressive young investor who has a high risk tolerance should invest in the same portfolio as a very conservative investor, but their risk levels should be very different," Dunn said.
"The argument is that a more balanced exposure gives you a better risk/return portfolio by avoiding concentration risk."
