Bridgewater surges on bearish euro bet, low rates

Ray Dalio speaks with CNBC at the 2014 WEF in Davos, Switzerland.
Patrick Bucci | CNBC

The largest hedge fund firm in the world has made a killing this year by correctly predicting two big trends: the continued decline of the euro and a delay in increasing U.S. interest rates.

Thanks to those bets and more, the main fund run by Bridgewater Associates, Ray Dalio's $169 billion institutional investor-focused firm, gained more than 14 percent net of fees in the first quarter, according to two people familiar with the performance.

The large return was partially driven by negative bets on the value of the euro, a short, coupled with a long position in the U.S. dollar, according to one of the people. Bridgewater's Pure Alpha hedge funds also gained by correctly predicting that there would be a delay in the increase of U.S. interest rates, a bet expressed by bullish positions on 10-year U.S. Treasurys, for example.