As a fund manager, Ray Dalio – the founder of Bridgewater Associates – has attained celebrity status and is arguably next only to Warren Buffett in the celebrity stakes. His book, “Principles”, “his 600-page manifesto for success that has sold 2.2 million copies since its publication in September 2017. The tome, an unlikely crossover hit that’s been praised by celebrities from Bill Gates to Sean “Diddy” Combs, was recently turned into an illustrated version for kids.”
The authors point out that the investment guru’s fame is at odds with his recent performance: “Following peak returns of 45% in 2010 and 25% in 2011, the fund’s performance has struggled. Dalio’s flagship has returned an annualized 3.8% since the start of 2012, even with a 15% gain last year…
Of course, Bridgewater isn’t alone in trailing the markets for much of this decade. In recent years, macro managers have found it hard to make big profits trading in their usual fare of government bonds, currencies, commodities and stock indexes. In their heyday, these funds regularly produced double-digit gains. Bridgewater has racked up an annualized 11.4% since its start in 1991. (Paul Tudor Jones and Louis Bacon, who both started in the 1980s, have done even better.)”
The authors point out that indifferent investment performance hasn’t impacted flows into Bridgewater’s funds. Why not, you might ask. “The difference between Dalio and his peers is investor response to the recent performance. In many cases, clients have fled. Perhaps the hardest hit has been Brevan Howard Asset Management, where assets peaked at more than $40 billion in 2013. It now manages about $7.5 billion. Bacon, who founded Moore Capital Management, said last month he was stepping back from his duties in part because of low returns.
By contrast, Pure Alpha II is closed to new capital and has a waiting list of about $5 billion, according to a person with knowledge of the matter. Investors credit Dalio’s reputation, along with savvy marketing and first-rate customer service…“Bridgewater has just become such an institutional name,” said John Culbertson, president and chief investment officer of Context Capital Partners, which invests in startup managers. “It’s very hard to get fired for allocating capital to Bridgewater because of who they are and their reputation.””
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