Bridgewater Wins Big in 2018 Despite Peer Struggles

Leader Ray Dalio attributes portfolio balance to flagship Pure Alpha fund’s 14.6% returns.

The world’s top hedge fund posted tremendous returns for 2018 that dwarfed indexes as well as its peers in a year where nearly every major asset class flopped.

Bridgewater Associates’ ($160 billion) Pure Alpha fund, its flagship, harvested 14.6% net of fees. This comes at a time where hedge funds are in limbo as the average firm lost 6.7% in 2018, according to the HFRX Global Hedge Fund Index. The bloodshed caused many previously flourishing funds to either close or lay off a chunk of their staff.

Due to market swings caused by the Federal Reserve’s accelerated monetary policy tightening and President Donald Trump’s trade war with China, among other things, much of the banner performance seen in 2017 fizzled last year. The S&P 500 fell nearly 4.4% in 2018, according to MarketWatch.

“If you are worried when the stock market goes down and happy when it goes up, it probably indicates that your portfolio is unbalanced,” said Ray Dalio, Bridgewater’s founder and co-chief investment officer, in a LinkedIn post. “To me, the key is to not have any systematic biases by structuring your portfolios and your incomes so that they hedge each other and are in balance.”

The Pure Alpha fund has been around since 1990, returning an average 12% annual net return in its 28-year history.

“Achieving good balance is the most important thing,” wrote Dalio.

Neither Dalio nor co-CIO Bob Prince was able to be reached for comment.

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