Ray Dalio’s Bridgewater Associates suffered losses in all three of its well-known funds last month.
Pure Alpha II, also known as Pure Alpha 18 percent, dropped 2.6 percent in May and is now down 5.9 percent for the year, according to a private database and a person familiar with the results. Pure Alpha I, also known as Pure Alpha 12 percent, was down 2.1 percent in May and is off 4.11 percent for the year, according to the same sources.
This is the fourth monthly loss in the first five months of the year for the macro giant’s Pure Alpha strategy. Its only profitable month was April. Meanwhile, Bridgewater’s risk parity fund, All Weather, lost 1.13 percent in May, trimming its gain for the year to 8.3 percent, according to the sources.
Bridgewater declined to comment.
As we reported a month ago, Bridgewater, the world’s largest hedge fund firm, entered the second quarter short interest rates in the U.S. and Europe, according to a person who heard a presentation on how Pure Alpha was positioned. The strategy seemed like one that could have made money in May, when stocks tanked and interest rates declined.
At the end of March, Bridgewater was long British government bonds, Asia bonds, and Brazil bonds, according to the person. The firm was also long the U.S. dollar, euro, Mexican peso, the Turkish lira and the Russian ruble, while short the British pound and Australian dollar. The person said Bridgewater was also short U.S. stocks and long Europe, Japan, non-Japan Asia, and emerging markets.
Meanwhile, the hedge fund firm’s top executives have recently weighed in on the growing trade tensions between the U.S. and China. Tariff negotiations between the two countries will have ramifications for Bridgewater, which began offering a China strategy last year.
Bridgewater co-CEO David McCormick told the audience at the Bloomberg Invest conference in New York this week that the dynamics between the U.S. and China “will be the defining bilateral relationship of our lifetimes.” He said the relationship will also be “very difficult to manage.”
In a May 29 LinkedIn post, Dalio wrote that the conflict between the U.S. and China is much more extensive than a trade war, extending to “American and Chinese businesses, technologies, capital markets, influences over other countries, militaries, ideologies, and most everything else.”
