Ray Dalio’s Flagship Fund Takes a Rare Tumble

This year isn’t shaping up to be the best for hedge fund impresario Ray Dalio’s investments. His flagship Pure Alpha is down 6% through August 23.

Dalio, the founder and co-chief investment officer of hedge fund firm Bridgewater Associates, the world’s largest with $150 billion, made the wrong bets on where global interest rates were headed. The correct answer: down. This fund, which focuses on macroeconomic trends, lags behind the MSCI World Index’s 13% return for the same period.

This marks quite a comedown from 2018, a tough year for the stock market (the S&P 500 slid 4.4%) and hedge funds in general (Hedge Fund Research figures they lost 6.7%). Pure Alpha gained 14.6%, after fees, in 2018. Dalio had a bearish strategy last year, which failed to pay off this year, when he figured rates would climb. This year, the one central bank that was boosting rates, the Federal Reserve, did an about-face.

In January at Davos, Switzerland’s global annual summit, Dalio lamented that interest rates had been lowered too much for too long by central banks in a stimulus campaign to combat the 2008-09 economic downturn. He criticized the Federal Reserve for its policy, since reversed, of hiking rates too fast. But he wasn’t opposed to the increases, just the speed.

Bridgewater didn’t return a request for comment.

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Tags: Bridgewater Associates, Hedge Funds, Interest Rates, Ray Dalio