Bridgewater Associates posted gains in all of its main funds in February, with the firm’s latest monthly results coming in just one day after founder Ray Dalio announced a major management shake-up at the world’s largest hedge fund firm.
The 67 year-old said he is stepping down as co-chief executive officer of the Westport, Connecticut firm as part of an earlier announced 10-year management succession plan. In addition, Jon Rubinstein, who joined the firm from Apple as a co-chief executive officer just 10 months ago, is also leaving the firm.
Dalio is remaining as co-chief investment officer and chairman, vowing to stay at the firm until he dies.
David McCormick, who had been serving as president, will now be a co-chief executive along with Eileen Murray, who for years has served on the management committee.
In any case, in February, Bridgewater’s two main funds moved back into the black.
Pure Alpha I was up about 75 basis points. As a result, it is up 16 basis points, or 0.16 percent, for the year.
Pure Alpha II rose a little more than 1 percent and is now up 0.11 percent.
The firm’s All Weather risk parity fund climbed about 2.25 percent in February and is now up 3.70 percent for the first two months of the year.
As we have previously reported, Dalio had been bearish for some time. But shortly after the election he told investors that an ideological shift to the right will create a better environment for business and the markets.
“Donald Trump is moving forcefully to policies that put the stimulation of traditional domestic manufacturing above all else, that are far more pro-business, that are much more protectionist, etc.,” he added at the time.
However, by the new year Dalio had grown concerned over some of President Donald Trump’s rhetoric, which he believes could have implications for investors. At January’s World Economic Forum in Davos, the macro specialist told attendees they should spend less time watching what the Federal Reserve does and pay more attention to Trump’s populist messages.
In an interview on CNBC he asserted this is the first year politics has become much more important. “If you look at Europe as a whole and you’re going to say what is the greatest threat to the European Union? It is not the debt crisis. It is not central bank policy. It is the movement of populism. Populism is the No. 1 economic issue that market participants should be watching. I want to be loud and clear — populism scares me.”
Dalio said populism leads to extremism. And in this environment it is not clear how a change in policy makers would impact markets.
