Ray Dalio is the founder of Bridgewater Associates, the world’s largest hedge fund firm and is one of the most iconic money managers on Wall Street.
The Harvard graduate created the All Weather fund in 1996 and revolutionized traditional optimal strategic asset allocation models. Instead of balancing portfolios based on total weightings only, he included risk, inflation and growth (now referred to as ‘risk parity’) in order to match weightings with risk exposure given certain inflation and growth scenarios.
The new spin on portfolio theory helped the All Weather fund return some of the most consistent numbers in the hedge fund business and allowed Bridgewater to grow assets under management to over US$160 billion (his personal net worth grew as well, now over US$15 billion). The All Weather fund holds roughly 50% of Bridgewater’s total AUM.
Mr. Dalio is a big believer in gold as a hedge against inflation and believes every portfolio needs a gold allocation.
The All Weather fund calls for a 30% weighting in stocks, 15% intermediate term Treasuries, 40% long-term Treasuries, 7.5% gold and 7.5% commodities. This means, the All Weather fund is holding up to US$6 billion in gold or roughly 4.7 million ounces (at $1,270/oz gold price).
“I think there’s a way of looking at things in which people overly complicate things perhaps in a desire to be overly precise and can easily lose sight of the important basic ingrediants that are making those things up.” – Ray Dalio
Over the last 5 years, the fund has averaged 11.8% annually.
Visit http://www.bwater.com/ to learn more.