| Raymond Daylio, Bridgewater Associates (Bloomberg) |
Westport, Connecticut-based Bridgewater Associates, the world’s largest hedge fund firm, suffered big losses in two of its hedge funds in the second quarter.
The macro-focused firm, which had $89.6 billion in assets at the beginning of the year, was mostly hurt by short bets on the euro and long bets on European equities. Bridgewater Pure Alpha Fund II posted a 3.5 percent loss in the three-month period ending in June, cutting its gain for the year to 10.5 percent. Bridgewater Pure Alpha Major Markets II lost 8.2 percent in the quarter, slashing its gain for the first half to 12.1 percent. according to an investor.
Even so, both trades are making money for the year, the investor says. They also continue to be core positions for Bridgewater.
The feeling among investors is that while quantitative easing has boosted economic conditions for Europe, euros are moving to other markets where yields are higher, putting further pressure on the currency. On the positive side, the cheaper euro and improving growth environment on the Continent look to boost European equities.
In any case, Bridgewater is apparently growing more positive on the economy. Entering the third quarter, Bridgewater Pure Alpha Major Markets II is 333 percent long and 313 percent short, or 20 percent net long. This compares with a 2 percent net long position at the end of the first quarter and 16 percent net short at year-end.
On the other hand, the Bridgewater Pure Alpha Fund II was 326 percent long and 366 percent short entering the third quarter of 2015. As a result, it is 40 percent net short. It was 110 percent net short at the end of the first quarter, however, according to the investor. It was 50 percent net long at year-end.
Last year Bridgewater founder Raymond Dalio earned $1.1 billion, ranking third on Alpha’s annual Rich List ranking of top-earning hedge fund managers.
Gregory Jensen, partner, co–chief executive officer and co–chief investment officer at Bridgewater, and Robert Prince, a partner and the firm’s co–chief investment officer, tied for No. 11 in the ranking, each earning $400 million.
