World's Largest Hedge Fund Raises At Least $800M In Post-Dalio Era Strategy To Counter Equity Bear Markets: Report

Bridgewater Associates, founded by billionaire investor Ray Dalio, has reportedly raised a minimum of $800 million in recent months for a new fund strategy that has been designed to help wade through equity bear markets and generate returns negatively correlated to equities.

The launch of the strategy comes at a time when the hedge fund is looking to revamp its business after founder Dalio gave up control, a Reuters report said.

The hedge fund launched the “Defensive Alpha” strategy in July last year, the report said, citing regulatory filings. Two fund vehicles under that strategy’s name had raised $836.4 million from investors since their launches, it added.

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Bridgewater invited a limited set of clients that included seed investors, and has now been offering the strategy to more investors, the report said citing a source familiar with the matter.

Price Action: Markets have witnessed significant bouts of volatility since last year that spilled into the first two months of 2023 as the Federal Reserve tries to rein in decades-high inflation that continues to remain sticky.

The S&P 500 plunged 19.4% in 2022, while the Nasdaq Composite lost 33.1%, registering the biggest annual percentage decline for both indexes since 2008. However, Bridgewater’s flagship fund, Pure Alpha gained close to 9.5% and outperformed global equities indexes, the report said.

The SPDR S&P 500 ETF Trust (NYSE:SPY) gained over 6% on a year-to-date basis while the Invesco QQQ Trust Series 1 (NASDAQ:QQQ) gained over 13%.

A strategy like Defensive Alpha could appeal to pension funds, which have portfolios heavy with bets on stocks and have not found the best protection against market downturns, a hedge fund investor told Reuters.

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