(Bloomberg) — Wealthfront Inc . is closing its equity risk fund after years of underperformance, marking the end of an uphill battle to deliver sophisticated strategy to the masses.

The digital wealth management firm said in a Monday delivery that the Wealthfront Risk Parity Fund will be liquidated and dissolved on or about January 3. The product, which has almost $1.3 billion in assets, will no longer pursue its stated investment objective and will begin liquidating its portfolio “as soon as is reasonable.” it said in the file.

The announcement marks the latest chapter for the mutual fund, which has been a magnet for criticism since it was announced in 2018. The idea was to emulate the diversified investment style made famous by billionaire hedge fund manager Ray Dalio.

Risk parity strategies can vary, but the general idea is to invest in all assets based on how volatile each is, often using leverage to optimize returns relative to the risks taken. But the investment style, in one form or another, has often disappointed in recent years, and Wealthfront's version has performed particularly poorly.

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Since inception, the Wealthfront Risk Parity Fund has posted a loss of 2.2%, according to data compiled by Bloomberg, while the S&P Risk Parity Index has gained more than 50%. That compares with a return of about 126% for the S&P 500 Index.

A spokesman for Palo Alto, Calif.-based Wealthfront said the closing of the risk parity fund was part of a larger update of the firm's recommended asset allocations, which it makes intermittently based on new data. of the market.

“The performance of that fund has been terrible,” Jeffrey Ptak, chief ratings officer at Morningstar Research Services, said by email. “Perhaps an example of trying to extrapolate the performance of a strategy in one environment (which was pretty good if you were rebalancing into bonds and borrowing as rates were going down) to another (which has been much less good in those ways).

Wealthfront is one of the best known of a new breed of money managers often referred to as robo-advisors for using technology to deliver simple investment solutions to the masses. The company has grown to command $75 billion in assets, largely by positioning itself as a friendly, low-cost place to make investments.

The firm's risk equity offering was its first equity mutual fund, and it attracted controversy from the start because it automatically selected users into the fund, rather than allowing them to join of their own volition. Just months after its launch, a backlash from investors pushed Wealthfront to fee reduction for the product in half.

Wealthfront has created controversy with the Dalio-Look-Alike fund

The risk party boomed after the 2008 financial crisis as investors looked for a way to protect themselves from the next big cataclysm. But its defensive appeal has lost some of its luster as U.S. stocks have rallied more and more over the past decade and beyond. struggled to deliver on its promise during several market shocks that spread to assets.