A Different Kind of Company.
Bridgewater Associates
Tagline
Net Worth
$150,000,000,000
Started in (City)
New York
Started in (Country)
United States of America
Incorporation Date
01st December, 1975
Bankruptcy Date
-
Founders
- Ray Dalio
About
Bridgewater Associates is an American investment management firm founded by Ray Dalio in 1975. The firm serves institutional clients including pension funds, endowments, foundations, foreign governments, and central banks.
It utilizes a global macro investing style based on economic trends such as inflation, currency exchange rates, and U.S. gross domestic product. Bridgewater Associates began as an institutional investment advisory service, graduated to institutional investing, and pioneered the risk parity investment approach in 1996. In 1981, the company moved its headquarters from New York City to Westport, Connecticut, and currently engages 1,500 employees. As of February 2021, it had approximately US$160 billion in assets under management.
Beginning
Bridgewater Associates was founded by Ray Dalio in 1975 from an office in his Manhattan apartment. At that time, the business consisted exclusively of advising corporate clients and the management of domestic and international currency and interest rate risk. The firm later changed its emphasis and began selling economic advice to governments and corporations such as Nabisco and McDonald’s. The company began publishing a paid subscription research report called the Daily Observations which inspired McDonald’s Corp. and its main supplier to become clients in the early 1980s. Another client was Banks of Mid-America and its treasury department director, Bob Prince, later joined Bridgewater Associates as co-CIO. In 1981, the company moved its offices from New York City to Connecticut.
The company’s first account was funded by a US$5 million fixed-income investment through Hilda Ochoa-Brillembourg of World Bank in 1987. In the mid-1980s, the firm changed its business focus from currency and interest rate management to global bonds and currencies for institutional investors. As a fixed income and currency adviser to institutional clients, the company gained a reputation as a currency trader and a developer of techniques for overlaying currencies. In 1990, it launched a hedge fund portfolio using monies from Kodak and Loews Corporation and began formally offering its currency overlay products to its clients.
Road to Success
Bridgewater Associates developed several "innovative investment strategies" during the 1990s such as inflation-indexed bonds, currency overlay, emerging market debt, global bonds, and "super-long duration bonds". The firm also "pioneered the separation of alpha and beta" investments and developed a strategy called "alpha overlay" which involved a portfolio of "20 uncorrelated" investments, leveraged for risk or return and combined with cash or an investment market benchmark.
The firm launched its Pure Alpha fund and began to market portable alpha investment strategies in 1991. The Pure Alpha fund did well during the market’s downturn of 2000 to 2003 and, as hedge funds became more popular, the company expanded its assets through its connections with various underfunded pension funds, some of which were already clients. In 1992 the firm introduced its global bond overlay program. In 1995, company executives participated in the discussions at the U.S. Treasury and advised the federal government on the development of inflation-indexed bonds.
Bridgewater launched its All Weather hedge fund and pioneered the risk parity approach to portfolio management in 1996. The firm’s assets under management grew from US$5 billion in the mid-1990s to US$38 billion by the year 2003. In June 2000, the firm was ranked as the best performing global bond manager for that year and the prior five years by Pensions & Investments magazine. In 2002, the company was ranked by Nelson Information as the World’s Best Money Manager in recognition of the 16.3% return on its International Fixed Income program. The firm received the Global Investor Awards for Excellence-Global Bonds award in 2003. The following year the company received the Global Pensions (magazine) Currency Overlay Manager of the Year award, and 2 "best in class" awards from the PlanSponsor Operations Survey.
Challenges
By 2007, the firm’s total assets under management grew to US$50 billion (from US$33 billion in the year 2000). According to a 2007 article in Barron’s magazine, "nobody was better prepared for the global market crash" than its clients and subscribers to its Daily Observations. The company "began sounding alarms in the spring of 2007 about the dangers of excessive financial leverage." The company’s researchers reviewed the public accounts of most of the major financial institutions around the globe and found that estimated future losses due to bad debts totaled US$839 billion. In December, these conclusions were reported to the U.S. Treasury Department when company founder Ray Dalio met with U.S. Treasury Secretary staff and other White House economic advisers. Bridgewater’s Pure Alpha fund "spared its investors" from most of the stock market’s "meltdown" in 2008.
Failures
The strategy adopted by the firm was not successful in 2009 when economic growth responded faster than anticipated and the Dow Jones Industrial Average increased by 19% while the company’s Pure Alpha fund reportedly gained a mere 2% to 4%. Bridgewater’s Pure Alpha II has posted a historic average return of 12 percent with only 3 losing years. Senator John McCain visited the firm and addressed company employees during his 2008 presidential campaign. The Teacher Retirement System of Texas (TRS) invested $250 million in a stake in Bridgewater Associates Intermediate Holdings, LP.
Reportedly, The company has been likened to that of a cult, but Dalio denies that and insists that the firm is a dedicated "community". To back up the cons, In 2016, an employee filed a complaint with the Connecticut Commission on Human Rights and Opportunities, saying that the hedge fund was like a “cauldron of fear and intimidation”. The New York Times reported that "several former employees recalled one video that Bridgewater showed to new employees that were of a confrontation several years ago between top executives including Mr. Dalio and a woman who was a manager at the time, who breaks down crying".
Achievements
- April 2016, Absolute Return Billion Dollar Club: Bridgewater ranked #1
- June 2017, Institutional Investor Hedge Fund 100: Bridgewater ranked #1
- January 2018, LCH Investments Ranking: Bridgewater ranked #1
- January 2019, LCH Most Successful Hedge Funds: Bridgewater ranked #1
- January 2020, HRC Corporate Equality Index: Bridgewater scored 100%
- January 2021, HRC Corporate Equality Index: Bridgewater scored 100%
- January 2021, LCH Investments Ranking: Bridgewater ranked #1
CEOs
- Eileen Murray
- David McCormick