Bridgewater AUM Rises To $142 Billion: Best And Worst Firm Trades Revealed

Tyler Durden's picture

In a world where "3 and 50" funds are revealed to be nothing but "expert network" inside-information churning, Lance Armstrong clones, performing great until exposed for having been boosted to the brim with stimulants, in this case inside information, or where even serious players are caught in ego pissing contests over who is right and who is wrong over a given stock (Herbalife comes to mind) it becomes almost difficult to find true alpha generators, which outperform the market not due to non-public, material information. Yet they still do exist, and probably the best example of one, continues to be Ray Dalio's Bridgewater, a fact which is not lost on us, or the bulk of the sophisticated asset allocators out there. As per the firm's latest monthly update, the hedge fund's total AUM has risen to a mind-blowing $142.1 billion - a record for any hedge fund anywhere, of which $60.8 billion is allocated to Pure Alpha, the firm's active strategy.

One look at Pure Alpha's return profile shows why the future is as bright for Bridgewater as the past.

From the profile:

In 1991 we laid out our expectations for the Pure Alpha strategy – produce a return-to-risk ratio of 1.0, which translates to an average annual return of 18% and standard deviation of 18%. Over the subsequent 21 years our performance has been consistent with these expectations. The following chart shows the expectations that we communicated at that time compared with our subsequent performance. The green and blue lines represent our range of expectations and the red line reflects the cumulative alpha since the inception of the strategy. As you can see, our performance across time remains consistent with the expectations that we set out then and that we have today.

But what everyone is most interested in is the breakdown of various P&L strategies that the firm employs in generating its nearly flawless alpha-generating execution.

So without further ado, here they are:

In short: 95 trades axes, which saw December post more winners than losers, with the biggest gainer being the EURJPY pair, while the biggest detractor was long gold.

Somehow, we have a feeling that the underperformance of the yellow metal will not persist.

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firstdivision's picture

So he's currently guaranteed to get $2.8B just on the maintenance fee % alone.  Not a bad gig.

GetZeeGold's picture



They make money off the churn.

Panafrican Funktron Robot's picture

Funny how, apart from the most obvious, telegraphed trade of the year (EUR/JPY), they massively underperformed.

Zaydac's picture

"a mind-blowing $142.1 billion"

Poof! A bagatelle. Fed Flow $85b a month could buy them in about 52 days.

buzzsaw99's picture

At that rate his fund should double every three years. [/sarc.]

AccreditedEYE's picture

In all seriousness, amazing money manager. Now if you'll excuse me, I have a dip to buy.

GetZeeGold's picture



Better hit that cold call sell book and get someone else to buy for you.

AccreditedEYE's picture

Not really sure what that means. People should relax a bit... I'm simply pointing out that it's actually funny how this has become so easy a chimp can do it.

Howdan's picture

Having read alot about Hedge Funds and their managers and strategies over the years I have to say the man I admire most is Ray Dalio. His wisdom, humility and overall philosophy have gained my immense respect and I enjoy listening to his comments.

One day I aspire to be as successful as Mr Dalio and have learned so much from him through reading books like Hedge Fund Market Wizards.

The quote of his I always have in mind whenever I trade is "Always try to be an independent thinker". Great advice.

Muppet Pimp's picture

Read 'The Principles' at BW's homepage for some inspiring words to live by. Good stuff right there.

Freddie's picture

Well everyone here is pretty sarcastic and many hedge fund managers are scum.  Ray Dalio and Bridgewater are the real deal.  He is not a Warren Buffett, he is not an ego maniac and they do not engage in Stevie Cohen like scams.   Ray, Hugh Hendry and Kyle Bass have my respect.

NoDebt's picture

Not bad.  What happened since late 2011, though?  That looks decidedly "flattish" for such a strategy.  And 2012 shoulda been rockin' a lot harder than it was, I would think.

Would they have been on the infamous list of "Hedge Funds that underperformed the market this year" (recent ZH article)?  I think they would, unless I'm missing something.

Itch's picture

The old saying "diversification is the last refuge of the scoundrel" is in full effect here. They must have an awful lot people working for them. Remarkable all the same, especially since they had a two year long draw-down and stuck the course. 

Mercury's picture

I think I speak for the entire investment community in saying:

                                     Holy shit!

mirac's picture

Something doesn't smell right here...I suspect some illegal activities that will surface at some point in time and blind-side their investors.

csmith's picture

"In a world where "3 and 50" funds are revealed to be nothing but expert network-boosted Armstrong clones,"


Great line. All we need now is the guy with the "movie trailer voice" to recite it...


GFORCE's picture

These are the articles I follow the hedge for!! Keep up the good work!

Freddie's picture

In short: 95 trades axes, which saw December post more winners than losers, with the biggest gainer being the EURJPY pair, while the biggest detractor was long gold.

Somehow, we have a feeling that the underperformance of the yellow metal will not persist.

Ray likes gold.

Gold = barbaric relic.  Charlie Mungo and Warner Buffert hate gold.  (sarc)

Ray Dalio was interviewed and the interviewer said "well Buffet does not like gold..."
Ray - "He is making a big mistake."


Spoken like a super smart guy who came from a fairly working class family versus that evil fraud Buffett who's daddy was a senator.

long-shorty's picture

I hope he is right. We are effectively long GLD for about 12.6% of AUM at present, which is the biggest position we've ever had in gold. I have some fear in the back of my mind that the blowoff move in GLD from 140 to 185 last year was steep enough to really have marked a top, but if it was not, then our gold position is still much too small.

Gloeschi's picture

I don't get the first table. It says net performance 0.8%. I assume for 2012. Where are my 18%?