| Raymond Dalio, Bridgewater (Bloomberg) |
Bridgewater Associates absorbed another hit to its image last month, when the New York Times revealed the existence of a complaint alleging that an employee at world’s largest hedge fund firm was sexually harassed by a coworker and pressured by other employees at the firm not to report the incidents. The media brouhaha — and Bridgewater founder Raymond Dalio’s lengthy rebuttal — did not appear to distract the firm’s investment professionals from doing their jobs, however.
Westport, Connecticut-based Bridgewater’s best-known funds posted mostly strong gains in July. Pure Alpha II gained a modest 20 basis points — or 0.20 percent — trimming its loss for the year to 11.64 percent. The fund lost about 2.70 percent in June. But Pure Alpha I posted a much stronger 4.1 percent or so gain in July. This cut the fund’s loss for the year to 7.66 percent.
All Weather, the firm’s risk parity fund, rose another 3 percent for the month. As a result, it is up 13.20 percent for the year, making it one of the better-performing hedge funds this year. Interestingly, this is the first month since January that the Pure Alpha funds and All Weather moved in the same direction. The firm declined to comment on the results.
Pure Alpha is Bridgewater’s flagship strategy. Launched in 1991, the $65 billion strategy has little correlation to the stock market indexes. Dalio has previously described All Weather as “a strategic asset allocation mix, not an active strategy.” Pure Alpha accounts for about 45 percent of Bridgewater’s total assets under management, while All Weather accounts for 40 percent.
Bridgewater has faced an onslaught of criticism in recent years over its corporate culture and Dalio’s philosophy of “radical transparency.”
As we noted about two weeks ago, the Times story reported that a former Bridgewater employee filed a complaint with the Connecticut Commission on Human Rights and Opportunities alleging he was frequently pressured by a supervisor to have sex with him but was intimidated from reporting the incidents.
It was also reported that the National Labor Relations Board filed its own complaint alleging Bridgewater “has been interfering with, restraining and coercing” the individual, Christopher Tarui, and other employees from exercising their rights by forcing them to sign confidentiality agreements when they are hired.
Tarui’s complaint describes Bridgewater as a “cauldron of fear and intimidation” with “an atmosphere of constant surveillance by video and recording of all meetings.”
In a written response at the time, Dalio said the Times report included “significant mischaracterizations of our business” and “distortions.”
He said the firm can’t comment on the specific case because it’s an ongoing legal matter “and our desire to maintain the privacies of the people involved for fear that they too will be tried in the media through sensationalistic innuendos.” But he added that the firm is confident that the case was handled consistently with the law. He also asserted that Bridgewater is “well known for giving employees the right to speak up, especially about problems, and to make sense of things for themselves. Everyone is encouraged to bring problems to the surface in whatever ways they deem to be most appropriate.”
