Bridgewater bucks trend to make clients $13.8 billion

Wed Feb 29, 2012 8:43am EST
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By Tommy Wilkes

LONDON (Reuters) - Bridgewater Associates, the world's biggest hedge fund, handed clients $13.8 billion last year, catapulting founder Ray Dalio above long-time rivals such as George Soros and John Paulson as the industry's biggest money maker in 2011, research showed.

Bridgewater's flagship Pure Alpha fund, which runs $71.9 billion, has now made clients $35.8 billion after fees since its inception in 1975, according to research from hedge funds investor LCH Investments, part of the Edmond de Rothschild Group.

The wider hedge fund sector endured a torrid 2011 and lost clients a total of $123 billion after most managers were wrongfooted by volatile markets, the research showed. Paulson alone lost clients nearly $10 billion last year.

Bridgewater's huge return to clients, which comes on the back of its fund's strong performance, will likely mean a bumper paycheck for billionaire Dalio, who founded the Westport, Connecticut-based firm out of a two-bedroom apartment in 1975.

"The emergence of Bridgewater Pure Alpha and the gains they have reported in the past two years are outstanding and demonstrate the great opportunities that exist in macro investing at this time," said Rick Sopher, chairman of LCH Investments.

Macro funds, which make calls on global economic events with bets on bonds, currencies, commodities and equities, are some of the industry's most celebrated, turning veteran managers like Louis Bacon or Paul Tudor Jones into some of the wealthiest investors in the world.

"Macro investing is notoriously difficult, but the best managers are able to find opportunities, especially in troubled markets," Sopher said.

With the payout to investors, Bridgewater -- which employs 1,200 people -- can also boast that it made far more money for clients than most Wall Street giants in 2011. Goldman Sachs (GS.N: Quote) made a $2.5 billion profit, while Morgan Stanley (MS.N: Quote) reported income of $4.2 billion.   Continued...