Hedge Funds

The world's largest hedge fund posted a 15% gain last year after calling global economic slowdown

Key Points
  • Bridgewater, the world's largest hedge fund, posted returns for 2018 that not only outperformed benchmark indexes for various asset classes, but also many of its peers.
  • Nearly every major asset class ended the year in the red, including the S&P 500, which declined almost 7 percent excluding dividends. 
Ray Dalio, founder of investment firm Bridgewater Associates.
J. Countess | Getty Images

Bridgewater, the world's largest hedge fund, posted returns for 2018 that not only outperformed benchmark indexes for various asset classes, but also many of its peers.

The firm's flagship Pure Alpha fund finished the year returning 14.6 percent net of fees, a person with knowledge of the matter said. The average hedge fund lost 2 percent in the year through November, according to Hedge Fund Research. Full-year numbers from HFR are expected this week.

Nearly every major asset class ended the year in the red, including the S&P 500, which declined almost 7 percent excluding dividends.

Bridgewater co-chief investment officer Bob Prince told the Financial Times in October that the economy was at an "inflection point where the economy is moving from hot to mediocre."

Bridgewater, founded by Ray Dalio, has about $160 billion in assets under management and trades across 150 markets, of which it seeks minimal correlation.

The firm has operated the Pure Alpha strategy for nearly three decades and has generated an average annual net return of about 12 percent per year, with three years of losses over that time frame, according to the person with knowledge of the matter.

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Key Points
  • Bridgewater's Bob Prince reportedly believes the recent volatility in U.S. markets was sparked by the realization that corporate earnings growth may have topped out.
  • Prince pointed to the recent rise in interest rates and the dwindling effects from President Donald Trump's tax cuts as suspects for the tempered expectations.
  • "We are now approaching the stage where monetary tightening could produce, perhaps not a big downturn, but more pressure," Prince told the Financial Times.