- In a candid interview with the Financial Times, billionaire investor and head of Bridgewater Associates Ray Dalio acknowledged that he was caught blindsided by COVID-19 (coronavirus)
In a candid interview with the Financial Times, billionaire investor and head of Bridgewater Associates Ray Dalio acknowledged that he was caught blindsided by COVID-19 (coronavirus). Dalio’s funds did not pull out of stocks and commodities in time to prevent losing substantial value.
As of March, Bridgewater’s flagship fund called Pure Alpha Fund II was down 13% and 20% for the year according to the Financial Times.
“We’re disappointed because we should have made money rather than lost money in this move the way we did in 2008,” said Dalio via Financial Times. “We did not know how to navigate the virus and chose not to because we didn’t think we had an edge in trading it.”
That is why Dalio had the company stay in its positions rather than cutting all risks. And this month, Pure Alpha Fund II started betting that equities and Treasury yields would rise. But both fell due to coronavirus fears and the oil price war. Back in 2008, Bridgewater saw a 9.4% gain despite the 37% drop in the S&P 500 at the time.
“I wasn’t, and still am not, able to anticipate the most important things happening in the markets because of the extremely rare nature of the circumstances,” Dalio explained.
However, Bridgewater’s All Weather fund saw better results with a 2.5% gain year-to-date as of March 6. That fund uses a risk parity strategy, which automatically proportions investments based on major asset classes including bonds and equities. The higher quality funds drove the gains for the All Weather fund.
