Bridgewater Associates Winner
Bridgewater Associates, the world’s largest hedge fund, launched its risk-parity All Weather Fund in 1996. Founder Ray Dalio first wanted to find a way to safeguard his family’s wealth for generations to come. But then he figured that others could benefit from his insights. The concept gained momentum after the 2008 financial crisis.

Risk-parity funds employ rule-based investment strategies that go beyond traditional stocks and bonds. The idea is to put together a diversified portfolio where each asset class contributes an equal amount of risk, so returns are not primarily driven by stocks. The allocation is derived from historical research on how each asset performs and relates to other groups over time.

The concept that Bridgewater pioneered has blossomed into a movement. As a company white paper described it, the strategy ended up “fundamentally changing how the biggest capital pools in the world manage money.” The goal is to hold four different portfolios with the same risk, with each doing well in a specific investing climate: growth rises, growth falls, inflation rises, inflation falls. In other words, to invest in balance for the long run.

As Dalio argued in a Bridgewater video, there often will be a “ruinous environment for some asset classes.” Bridgewater’s answer to that harsh reality has been a breakthrough innovation.

Multi-Asset Finalists

• Goldman Sachs Asset Management

• Mellon Capital

• PAAMCO Prisma

• PIMCO