Bridgewater Associates is known for being the biggest in the world in terms of assets under management (AUM). With a whopping $154 billion in investor input, the company, founded over 40 years ago by billionaire Ray Dalio, sets industry-wide investment trends with the weight of its positions. And now, in a recent development, Bridgewater has expanded its assets by more than $22 billion as it has taken on new investments for the first time in years. This major increase is especially stark in contrast with figures from other hedge funds, where a plague of poor returns and high fees has prompted many investors to pull money, causing total AUM to shrink in recent months.
New Investments and a New Strategy
Bridgewater has kept its active funds closed to new investments for about seven years. Suddenly, the company recently revealed that it had made the shift to opening up some of its funds for new investor interest alongside a plan for a fresh investment strategy. The turn may have also been prompted by a decline in Bridgewater's total assets as a result of recent turbulence in the market, but in any case investors have shown that they remain committed to Bridgewater as a place to grow their money.
Client Continuity and Retention
One of the major reveals of the new inflows of $22.5 billion toward Bridgewater funds is that clients, both long-time Bridgewater investors and those new to the fund, still have trust in Bridgewater when it comes to investing. At a time in which investor faith in hedge fund performance is at a significant low point, this speaks highly of Bridgewater, even in spite of the company's recent losses and publicity concerns regarding its corporate culture for employees.
On the other hand, while Bridgewater remains strong, it is nonetheless telling that the shift in the hedge fund industry has reached far enough to force even the largest funds to adopt new investment strategies and ideas, and to change their methods of working with clients.
Pure Alpha Troubles
Pure Alpha is one of Bridgewater's three main funds, alongside All Weather and Optimal Portfolio. While All Weather, under passive management, has grown by more than 13% in 2016 and Optimal Portfolio has remained unchanged, Pure Alpha has dipped by more than 9% on the year. For a fund of $69 billion, this turns out to be a huge amount of money. However, in the past six months Pure Alpha has actually managed to gain new investor funds. It seems that investor faith in the fund, which has averaged a 12% return each year since 1991 and has had positive returns since 2001, remains high in spite of some recent troubles.