Arrowstreet, which is majority owned and controlled by its senior partners, will initially establish two funds with Macquarie's Professional Series, a global equity fund and an emerging markets fund.
"Arrowstreet's decision to allocate $500 million of its emerging markets capacity to the Australian market is very exciting for us and for our clients, because it is very difficult to access high-quality managers in this particular asset class," Macquarie Professional Series head of product Andrew Findlay said.
The Arrowstreet Global Equity Fund will include emerging market stocks and global small caps.
The independent Cambridge, Massachusetts-based global equity manager specialises in managing global equity portfolios in a core, quantitative investment style.
The group currently manages more than US$15 billion for pension plans, endowments and foundations, mainly in the US and Europe.
"At Arrowstreet we focus our resources on research and portfolio management, so we are very pleased to partner with Macquarie to help distribute our investment capabilities to institutions and retail investors in this part of the world," Arrowstreet partner and president Bruce Clarke said.
The new partnership with Arrowstreet comes as the Macquarie Professional Series topped $1.3 billion in funds under management, 18 months since its launch.
