Exclusive: Bridgewater launches new fund strategy less dependent on equities

NEW YORK, March 5 (Reuters) – Bridgewater Associates has raised at least $800 million in recent months for a new fund strategy, regulatory filings show, an additional offering that comes as the hedge fund manager revamps its business after that founder Ray Dalio ceded control.

Connecticut-based Bridgewater, which manages $145 billion, launched the “Defensive Alpha” strategy in July last year, according to regulatory filings. A source close to Bridgewater said the strategy, which has not been previously reported, is designed to help weather bearish stock markets and generate returns that are negatively correlated to equities, meaning the fund’s earnings will rise if stocks fall.

Two fund vehicles under the name of this strategy had raised $836.4 million from investors since their launch in July, according to regulatory filings in late October, according to Convergence Inc, an alternative fund data provider that analyzed Bridgewater’s filings at the request of Reuters.

Bridgewater declined to comment on the $836.4 million raised.

Initially, Bridgewater invited a small group of clients, including seed investors who provide money for new launches, and is now offering its strategy to more investors, a source familiar with the matter said. There are 10 investors so far, according to filings, according to Convergence.

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The new strategy joins other offerings from the 48-year-old hedge fund, best known for its All Weather and Pure Alpha funds. Bridgewater’s most recent launch was a sustainability-focused fund in 2021.

Investors tried to navigate an uncertain market and economic outlook after central banks suddenly shifted from accommodative monetary policy to aggressive interest rate hikes to fight inflation. The S&P 500 fell 19.4% in 2022, while the tech-heavy Nasdaq fell 33.1%, the biggest annual percentage decline for both indexes since 2008.

In this market last year, Bridgewater’s flagship fund, Pure Alpha, gained around 9.5% and outperformed global equity indices. But that came after a much stronger start to the year, and its returns lagged rival macro funds. Pure Alpha actively bets on the direction of various types of securities – including stocks, bonds, commodities and currencies – by predicting macroeconomic trends.

The new strategy underscores how quickly Bridgewater is moving under a new generation of investors after Dalio, its founder, ceded control last year. On Wednesday, chief executive Nir Bar Dea announced a major overhaul of the hedge fund, including restricting investments in Pure Alpha and plans to launch new products.

A strategy like Defensive Alpha could appeal to pension funds, which already have portfolios loaded with equity bets and haven’t found hedge funds the best protection against stock market declines, according to a hedge fund investor who requested anonymity.

Reporting by Carolina Mandl, in New York; edited by Megan Davies and David Gregorio

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