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Ray Dalio’s Bridgewater Is Rare Bright Spot in Market Rout

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Jan. 8 2019, Updated 3:53 p.m. ET

Bridgewater’s double-digit gain

The world’s largest hedge fund, Bridgewater Associates, posted double-digit returns for 2018, a year when most of its peers incurred heavy losses. As reported by CNBC, Bridgewater’s flagship fund, Pure Alpha, finished the year 14.6% higher, net of fees.

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Losses for major hedge funds

David Einhorn’s Green Capital suffered its worst year in 2018 with annual losses of 34%. Its largest holdings include General Motors (GM), Brighthouse Financial (BHF), and Green Brick Partners (GRBK). Einhorn also became a short seller of Tesla (TSLA) recently. Dan Loeb’s Third Point also saw its worst year since 2008 in 2018. His fund lost 11% in 2018. Steve Cohen’s Point 72 Asset Management lost ~5% since its launch in February to November. According to the research firm, HFR (Head Fund Research), the funds across the industry lost an average 2% through November.

Dalio’s gains versus financial assets

Not only its hedge fund peers, but most of asset classes also finished in the red in contrast to Bridgewater’s double-digit gains. The S&P 500 (SPY), the Dow Jones Industrial Average (DIA), and the NASDAQ Composite (QQQ) lost 6.3%, 5.7%, and 1%, respectively. Gold (GLD) was down 3.7%. Only cash and US Treasuries (TLT) generated slightly positive returns.

CNBC reported that Pure Alpha has operated for nearly three decades with returns averaging ~12% per year. It has seen only three down years over that time period.

In the next part of this series, we’ll discuss what factors could have contributed to the outperformance of Ray Dalio’s hedge fund.

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