Global trends and central bank policy have fueled an environment in which investors should expect "lower than normal returns with greater than normal risk," hedge fund titan Ray Dalio wrote in an investor letter released Thursday.
The Bridgewater Associates founder contended that central banks would "increasingly ease" through negative interest rates and bond-buying. But those methods would have limited effectiveness amid already easy policy, he argued.
"As a result, central banks will increasingly be 'pushing on a string,'" Dalio wrote, adding that "QE will be less and less effective because there is less 'gas in the tank.'"
The U.S. Federal Reserve, which hiked from near-zero interest rates in December for the first time in more than nine years, could only boost the economy "a bit" with more easing, Dalio said.
The Bank of Japan and European Central Bank would hold even less sway, as they have already moved to negative interest rates, he argued.
Dalio's sentiments echoed comments he made to CNBC in January, when he contended that the Fed was more likely to ease policy than raise interest rates again. Amid global growth uncertainty and rocky U.S. stock trading this year, the Fed has indicated it plans to stick to its rate-hiking course.
Still, the minutes from the Fed policymaking committee's January meeting showed that officials worried that difficult global financial conditions could spread to the U.S. economy. Policymakers also considered changing their rate hike path and said they would monitor global economic developments like the battered oil market.
Dalio said central banks' "currency movements must be larger" because they cannot cut rates in some parts of the globe. That creates so-called "currency wars" and increases risk for investors.
"Asset prices have fallen largely as a result of this, together with the deflationary pressures brought about by most economies being in the later stages of their long term debt cycles," he wrote.
Dalio has earned a reputation for market calls. Bridgewater has more than $150 billion under management, and its flagship fund was up 4.7 percent in 2015, versus a 0.7 percent loss for the .