There are storm clouds on the horizon at Ray Dalio’s $150 billion Bridgewater Associates.
Yeah, excuse the weather imagery but it’s hard to resist given the sudden sharp reversal of fortunes with Bridgewater’s $70 billon All Weather portfolio. As Jenn Ablan and Katya Wachtel first reported, the portfolio that Dalio has long marketed to pension funds as an innovative investment strategy for navigating storm markets, isn’t doing so well in this stormy market.
The fund, as of last Friday, was down 6% for the month and down 8% for the year.
Bridgewater’s other big portfolio, Pure Alpha, which has about $80 billion in assets, also is suffering of late but not as much. The Pure Alpha II portfolio was down 1.12 percent as of June 18. But it’s the plunge at All Weather that’s the big story given how long and hard Dalio has worked to spread the religion of the portfolio’s risk parity strategy as a way for pensions to protect themselves from a sharp sell-off in stocks or bonds.
On Bridgewater’s website there are whole sections devoted to telling the story of the All Weather strategy and white papers on using risk parity to construct an investment portfolio.