(Reuters) - Bridgewater Associates LP, the Ray Dalio-led hedge fund giant famous for making money during the 2008 financial crisis, has posted double-digit losses so far this year amid sharp market declines sparked by the coronavirus outbreak, according to a note sent to clients on Wednesday and seen by Reuters.
Through March 16, Bridgewater's All Weather 12% volatility "risk parity" fund fell about 14% for the year; its Pure Alpha 18% volatility hedge fund declined about 21%; and its Major Markets 14% volatility hedge fund dropped about 7%, Dalio wrote in the note, which was later posted in full on LinkedIn here.
Dalio wrote that the performance was “not what I would want” but was “consistent with what I would have expected under the circumstances.”
Bridgewater has assets under management of about $160 billion, according to its website, and is trusted by some of the world’s largest investors to safeguard their money no matter the economic environment.
The S&P 500 index tumbled 7% on Wednesday, triggering a 15-minute trading halt of Wall Street’s main indexes for the second time this week, on fears that stimulus measures may not be enough to avert a coronavirus-driven recession.
Dalio said Bridgewater’s portfolios were positioned for relative economic strength but also had hedges on in case of an unanticipated steep market decline. The firm’s risk controls worked as designed, he said, adding that Bridgewater remained liquid and able to adjust its positions.
“Going forward, the world has now crossed a very dangerous threshold for financial markets and economies that poses great risks for all investors,” Dalio wrote, citing interest rates falling below zero percent amid an economic downturn, inequality and populism.
“It is one we have been preparing for for a long time.”
On Wednesday, Dalio posted on popular Chinese microblogging site Weibo to dispel rumors about a Bridgewater blow-up.
“There has been a rumor going around China that Bridgewater has ‘crashed’ or ‘is in trouble,’ Dalio wrote, attaching the client note with the firm’s performance and views. “You have my word that that is totally false and that Bridgewater is totally safe.”
He condemned “bad people” who spread such rumors. “I think we might have identified the rumor monger which we will pursue legally and disclose publicly if we are able.”
Reporting by Lawrence Delevingne. Additional reporting by Yiming Shen Editing by Chizu Nomiyama and Tom Brown