Dalio’s Bridgewater Funds Rose Across Strategies Last Month

  • Pure Alpha II now down 10% year-to-date, All Weather up 14%
  • Firm manages $150 billion in hedge funds and risk-parity pool

Ray Dalio’s $150 billion Bridgewater Associates gained across its main strategies last month, trimming losses in its Pure Alpha macro hedge funds and extending a rally in the company’s long-only All Weather fund, according to a person with knowledge of the matter.

Bridgewater’s Pure Alpha II, which has the majority of the assets in the firm’s hedge-fund strategy, gained 0.5 percent in September, reducing this year’s decline to 10.3 percent, said the person, who asked not to be identified because the information is private. Pure Alpha I, which targets lower volatility than the Pure Alpha II version, rose 0.3 percent for the month and pared losses through Sept. 30 to 6.7 percent.

Macro hedge funds have suffered in the face of persistently low interest rates in the U.S. and Europe. They fell 0.3 percent last month, bringing this year’s gains to 1.8 percent on average, compared to a 4.2 percent return for the industry, according to Hedge Fund Research Inc.

Dalio has warned for some time that the economy is at the end of a long-term debt cycle, characterized by a lack of spending despite interest rates near zero or even negative. He said at a seminar last week at the Federal Reserve Bank of New York that while central banks around the world will probably extend bond-buying programs, making higher-yielding assets seem attractive relative to bonds and cash, those investments are still expensive relative to their inherent risk. In that persists, betting on gold could prove preferable, he said.

“Investment returns will be very low going forward,” he said, according to a copy of his remarks.

The risk-parity All Weather fund, which seeks protection from market turmoil by investing in a combination of stocks, bonds and currencies, gained 0.9 percent last month, increasing its return this year to 14.1 percent, the person said. Bridgewater declined to comment on its returns.

Bridgewater, which invests globally across assets based on macroeconomic themes, opened Pure Alpha to select investors about six months ago after assets declined, a person with knowledge of the matter said last month. It had been closed since 2009. Despite its losses this year, the strategy attracted billions in new cash on the back of its strong long-term performance, the person said. Pure Alpha II has returned about 12 percent a year on average since 1991.

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