Dalio: We're 'cautious' ahead of Fed move

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The manager of the world's biggest hedge fund is playing it safe ahead of looming interest rate hikes by the Federal Reserve.

"Clearly the Fed has created expectations that it will tighten in either June or September, and such expectations are difficult to deviate from. For those reasons, we expect a Fed tightening and are cautious about our exposures," Ray Dalio and Mark Dinner of Bridgewater Associates wrote in a private note to clients and other followers March 11 obtained by CNBC.com.

"Since our confidence that the Fed can be effective in tightening is greater than ever while our confidence in the Fed's ability to be effective in easing is less than ever, we think it would be best for the Fed to err on the side of being later and more delicate than normal," the men added.

"To be clear, we don't know—nor does the Fed know—exactly how much tightening will knock over the apple cart. What we do hope the Fed knows, which we don't know, is how exactly it will fix things if it knocks it over. We hope that they know that before they make a move that could knock over the apple cart."