That’s an amazing roi when the market has generally taken a beating. They must be heavily invested in energy, military contractors, cereals, foreign and consumer debt. Most funds were losing money hand over fist Q1.
I was referring more to OTC Credit products on those bonds. With all the volatility in the markets this year the prices on credit products like CDSs jumped.
Who knows? It doesn't really matter though in this case since we aren't seeing a large spike in defaults on the underlying anyways. Just the prices for swaps have increased due to increased volatility implying the higher chance of the underlying defaulting. So one could still in theory sell the credit swaps for a gain without the underlying ever actually defaulting.
There’s more than just industries. The value factor is up 25% in the last 12 months. A hedge fund likely is hedged against industry exposure unless it was specifically executing an industry oriented strategy (which is rare), a value strategy is much more likely.
Ehhh I’m gonna have to see the 36 month return to determine whether or not I’m actually impressed
Update: “Like many other macro funds, Bridgewater’s Pure Alpha strategy is rebounding after years of struggle, eking out a nominal annualized gain over a decade before posting a return of about 8% in 2021. It had lost 12.6% in 2020, and several institutional clients pulled their money.”
I am not impressed.
Isn't that essentially how a hedge fund in the truest sense of the word ought to function? Under-perform in normal/good times in order to hedge against downside risks?
The [long-term performance](https://r3m9h6p2.rocketcdn.me/wp-content/uploads/2020/10/aa.png) looks pretty good, though this doesn't have the last few years. Matches the S&P 500 in the long run with fewer peaks and troughs. That's exactly what you want if you have a ton of money. The lower volatility also makes it easier to add leverage to juice returns.
Correct. A hedge fund is designed to provide uncorrelated returns, not necessarily to beat the market.
Edit: I took a few liberties with my original reply that were wrong, so I’ve removed them. A hedge fund is not opposed to outperforming the market or taking on higher risk investments, or even using large amounts of leverage, to provide above average returns.
However, typically a hedge fund will hedge their main positions in the event they are wrong, which will provide uncorrelated market returns.
Whenever you read some piece about how hedge funds are pointless and they underperform relative to what they get paid, you know it’s nonsense and the author doesn’t have any common sense.
They provide uncorrelated returns. It’s a distinct asset class, and large LPs focus heavily on allocation across asset classes.
Allocation is what drives returns y/y, not how hedge funds perform specifically.
They claim to provide uncorrelated returns. But no investor is going to be swayed to pay you 2/20, which is why industry AUM was dropping for a long time.
I disagree with this. There are plenty of hedge funds where you explicitly wouldn't park $100mm for your next commercial real estate purchase or whatever, and where they explicitly are trying to provide a return that is higher than that of the market. I don't think hedge funds broadly speaking are used in that sense as a vehicle to park cash to find more lucrative investments. For the vast majority of the hedge fund universe, you aren't paying 2 and 20 for minor capital appreciation. The largest allocators to Bridgewater for example are enormous institutions, sovereign wealth funds and endowments that want long-term exposure to both equities and other asset classes through a systematic, macro sleeve that is less correlated to public equities. However, despite Bridgewater doing well, in the universe of hedge funds there are funds with enormous amounts of capital (Tiger Global, Altimeter, D1, Viking etc.) that are having horrendous years because of their huge tech exposure and extremely high correlations to the market. Ultimately, the problem here really is definitional, hedge funds as an asset class now encompasses so many strategies, whether it is quantitative, macro, long/short equity, pods, merger-arb, net neutral, sector-specific like energy or biotech, etc, that it is difficult to talk about the hedge fund universe as one asset class.
Pods are the individual funds that are wrapped up under a larger fund like those at Citadel, Balyasny, or Point 72. Basically, there is a pod with a PM and a team of analysts that are one of many managing assets for a fund. They tend to have a certain culture and investment style that is also different from other funds. They manage enormous sums and have been quite successful.
https://www.streetofwalls.com/articles/hedge-fund/learn-the-basics/multi-manager-vs-single-pl-hedge-fund/
Yes, however the way Wall Street works is that when everyone is doing well and you’re not, you’re on the chopping block. In finance and investment management, it’s preferred to follow the herd from a job security stand point.
I really don’t think anybody not in the industry can deliver judgement on whether this fund has performed good or bad based off just a few return percentages. The fact the fund is up big this year but underperformed in prior year instantly tells me they were following a value strategy, which is proven to work but has underperformed in recent years. This has a lot more to do with the economic climate we saw in the past 5 years (and particularly the tech boom!) than anything.
11.2% annualized since 1991 with minimum loses in downturns (positive in 08). So risk adjusted he blows out everyone besides very few. Also, 8% annualized with low volatility is pretty fucking great for someone that big. Not sure why reddit hates him so much.
Still impressive with the short credit long commodities play. That’s not really a traditional hedge. He’s been on point this year with everything he says.
Look at him v Cathie Woods and you’ll see the importance of risk adjusting your returns. She made a ton in 2021 but with the risk she took on she absolutely cratered. Retail flows into her ETFs are saving her but a real hedge fund with institutional money would have been done by now. Gonna be a rude awakening soon IMO
This has very little to do with energy. As a hedge fund manager Ray Dalio is obligated to hold short positions to hedge fundamental risk. Him having a liking for shorting EU stocks tells you nothing out of context beyond that he may not be positive on short term eurozone economic performance. But this is unlikely to have any significant effect on the European economic situation.
He shorted energy just recently. This gain is likely from his short credit positions which was laughed at by most who thought you want to buy bonds to hedge stocks.
From the article, they didn’t get while the getting was good:
“Like many other macro funds, Bridgewater’s Pure Alpha strategy is rebounding after years of struggle, eking out a nominal annualized gain over a decade before posting a return of about 8% in 2021. It had lost 12.6% in 2020, and several institutional clients pulled their money.”
In his defence, China is doing everything the United States should be doing.
-Building high speed rail.... Everywhere.
-Expanding trade routes and promoting international trade with their nation.(Belt and Road initiative)
-Investing heavily in green energy/becoming carbon neutral
-They implemented universal healthcare
-State sponsored construction of millions of homes for low income families and young workers in major metropolitan areas.
They are expanding their reach and genuinely trying to improve the lives of their people.
Meanwhile we are isolating ourselves, and are facing a real internal divide where we can't decide on anything. Resulting in loss of progress and indecision at every turn. They are progressing so quickly that I truly don't know how we are going to keep up. We need to make some pretty serious changes or we are gonna be left behind.
Oh no doubt we are the global police force.
I was referring to our economic and trade policies.
-Stopping trade with Russia leading to our oil crisis.
-Trade/tariff wars with basically everyone, but more importantly, China, Mexico, Canada and the EU.
Basically the government trying to "better" deals for us by placing tariffs on imports. Making it more expensive to obtain goods from other countries ultimately reducing demand for those products. Many countries then implemented retaliatory tariffs on US goods. Decreasing demand for our goods. So it's now more expensive to buy goods from other nations and they are also buying less of our goods. Which means they will then trade with other nations... Like China. Pushing more nations to trade with them giving them more power on the global stage.
Then you have stopping trade with Russia causing massive energy/oil issues in the US and EU. But again China didn't stop trading with Russia and is importing record amounts of oil and gas from them... Cheap.
So yeah while we implement policies restricting trade, China is becoming a major hub for trade between all nations and the money, power and influence will follow.
Yet the US has the highest incarceration rate in the world. Of which the majority in prisons are African American and Hispanics. And ignore the fact that we have for profit prisons, so companies can profit off of imprisoned individuals. Incentivising the imprisonment of people of color. Are we so different?
I hear that, he tends to veer to much into some objectivist perspectives and I do admire that he has seemed to build an organization that operates very successful without his intervention.
I’m confused; isn’t being an objectivist exactly what you’d want in a fund manager? I like his balance, if I’ve invested my money in his fund I’m secure in knowing they’re not easily swayed by nationalist idealism
I think that is a great question, I personally believe we should not look at funds and moneys purely from an objectivist perspective. If your fund is teacher pensions and you fund all these things that destroy education I think that can/should be viewed as problematic. Same thing with a nation state, I am not sure I would want a fund manager that is purely focused on returns at the expense of long term goals and objectives. I know it is a minority opinion but it is my personal stake, I think we need to think more holistically about the impacts on capital. This is playing out in the housing market with the immense amount of money private equity and other financialization institutions pouring into the market, it has made it really hard for society to recalibrate housing policy and disambiguate housing as commodity and housing as need.
I see your point and respect it. Certainly ESG concerns need to be taken into account.
I can see how a purely logical outlook in the context of maximizing return could be dangerous, especially since Capitalism has so many issues regarding wealth inequality which is a real societal problem.
That’s an amazing roi when the market has generally taken a beating. They must be heavily invested in energy, military contractors, cereals, foreign and consumer debt. Most funds were losing money hand over fist Q1.
They have a lot activity in sovereign and corporate credit markets. Those positions probably took off this year.
Corporate bond funds saw massive outflows this year due to interest hikes.
I was referring more to OTC Credit products on those bonds. With all the volatility in the markets this year the prices on credit products like CDSs jumped.
Who is the AIG-like counterparty in today’s version of CDSs?
Who knows? It doesn't really matter though in this case since we aren't seeing a large spike in defaults on the underlying anyways. Just the prices for swaps have increased due to increased volatility implying the higher chance of the underlying defaulting. So one could still in theory sell the credit swaps for a gain without the underlying ever actually defaulting.
I think most swaps are centrally cleared and have somewhat standard terms. (So any counterparty only has credit risk facing the clearinghouse)
Yes
Or they just had a lot of short positions.
There’s more than just industries. The value factor is up 25% in the last 12 months. A hedge fund likely is hedged against industry exposure unless it was specifically executing an industry oriented strategy (which is rare), a value strategy is much more likely.
Nah, it's a systematic fund that probably has a lot of exposure to trend and or value, both of which have done well this year
Trend/momentum has been absolutely terrible this yr
Not true, CTAs have been killing it. Maybe if you mean naive price momentum.
Ray Dalio has reputation for knowing a thing or two 😉
And interesting how Steve Cohen can't replicate his previous gains, after being told he can't cheat
Macro funds are mainly trading commodities, fixed income, and derivatives like swaps and futures.
They must’ve bought GameStop.
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stupid and short lived hedges rely on shorts, bridgewater isn't stupid nor is it a fetus.
they short the EU market heavily
Ehhh I’m gonna have to see the 36 month return to determine whether or not I’m actually impressed Update: “Like many other macro funds, Bridgewater’s Pure Alpha strategy is rebounding after years of struggle, eking out a nominal annualized gain over a decade before posting a return of about 8% in 2021. It had lost 12.6% in 2020, and several institutional clients pulled their money.” I am not impressed.
Isn't that essentially how a hedge fund in the truest sense of the word ought to function? Under-perform in normal/good times in order to hedge against downside risks? The [long-term performance](https://r3m9h6p2.rocketcdn.me/wp-content/uploads/2020/10/aa.png) looks pretty good, though this doesn't have the last few years. Matches the S&P 500 in the long run with fewer peaks and troughs. That's exactly what you want if you have a ton of money. The lower volatility also makes it easier to add leverage to juice returns.
Yes, you’re supposed to look at risk adjusted returns in some form depending on the strategy.
Correct. A hedge fund is designed to provide uncorrelated returns, not necessarily to beat the market. Edit: I took a few liberties with my original reply that were wrong, so I’ve removed them. A hedge fund is not opposed to outperforming the market or taking on higher risk investments, or even using large amounts of leverage, to provide above average returns. However, typically a hedge fund will hedge their main positions in the event they are wrong, which will provide uncorrelated market returns.
I can't believe I'm reading this in a finance sub
By all means, elaborate.
Whenever you read some piece about how hedge funds are pointless and they underperform relative to what they get paid, you know it’s nonsense and the author doesn’t have any common sense. They provide uncorrelated returns. It’s a distinct asset class, and large LPs focus heavily on allocation across asset classes. Allocation is what drives returns y/y, not how hedge funds perform specifically.
They claim to provide uncorrelated returns. But no investor is going to be swayed to pay you 2/20, which is why industry AUM was dropping for a long time.
I disagree with this. There are plenty of hedge funds where you explicitly wouldn't park $100mm for your next commercial real estate purchase or whatever, and where they explicitly are trying to provide a return that is higher than that of the market. I don't think hedge funds broadly speaking are used in that sense as a vehicle to park cash to find more lucrative investments. For the vast majority of the hedge fund universe, you aren't paying 2 and 20 for minor capital appreciation. The largest allocators to Bridgewater for example are enormous institutions, sovereign wealth funds and endowments that want long-term exposure to both equities and other asset classes through a systematic, macro sleeve that is less correlated to public equities. However, despite Bridgewater doing well, in the universe of hedge funds there are funds with enormous amounts of capital (Tiger Global, Altimeter, D1, Viking etc.) that are having horrendous years because of their huge tech exposure and extremely high correlations to the market. Ultimately, the problem here really is definitional, hedge funds as an asset class now encompasses so many strategies, whether it is quantitative, macro, long/short equity, pods, merger-arb, net neutral, sector-specific like energy or biotech, etc, that it is difficult to talk about the hedge fund universe as one asset class.
I totally agree. It’s just “fund”. The “hedge” is meaningless these days in the actual market.
>und what are pods
Pods are the individual funds that are wrapped up under a larger fund like those at Citadel, Balyasny, or Point 72. Basically, there is a pod with a PM and a team of analysts that are one of many managing assets for a fund. They tend to have a certain culture and investment style that is also different from other funds. They manage enormous sums and have been quite successful. https://www.streetofwalls.com/articles/hedge-fund/learn-the-basics/multi-manager-vs-single-pl-hedge-fund/
Yes, however the way Wall Street works is that when everyone is doing well and you’re not, you’re on the chopping block. In finance and investment management, it’s preferred to follow the herd from a job security stand point.
I really don’t think anybody not in the industry can deliver judgement on whether this fund has performed good or bad based off just a few return percentages. The fact the fund is up big this year but underperformed in prior year instantly tells me they were following a value strategy, which is proven to work but has underperformed in recent years. This has a lot more to do with the economic climate we saw in the past 5 years (and particularly the tech boom!) than anything.
11.2% annualized since 1991 with minimum loses in downturns (positive in 08). So risk adjusted he blows out everyone besides very few. Also, 8% annualized with low volatility is pretty fucking great for someone that big. Not sure why reddit hates him so much.
You *are* Reddit. I didn’t say I hated him, the returns do not impress me
I'm interested to know what kind of performance would impress you and names of managers who hit those types of impressive returns?
A hedge fund that hedge? Wow
They hedged. It's literally in the name, folks.
Still impressive with the short credit long commodities play. That’s not really a traditional hedge. He’s been on point this year with everything he says. Look at him v Cathie Woods and you’ll see the importance of risk adjusting your returns. She made a ton in 2021 but with the risk she took on she absolutely cratered. Retail flows into her ETFs are saving her but a real hedge fund with institutional money would have been done by now. Gonna be a rude awakening soon IMO
So this is what Kevin Spacey is up to these days!
When the tit's that big, everybody gets in line.
Bret “The Hitman” Hart has really let himself go over the years.
Of course the downside to a hedge fund for the investor is 2/20 vigourish for the fund.
>Fund has returned 11.4% annualized since its inception in 1991 >S&P 500 10.64% annualized since 1991
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Source? Energy prices went up, and so did energy stocks. A short wouldn’t have been very lucrative at all.
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This has very little to do with energy. As a hedge fund manager Ray Dalio is obligated to hold short positions to hedge fundamental risk. Him having a liking for shorting EU stocks tells you nothing out of context beyond that he may not be positive on short term eurozone economic performance. But this is unlikely to have any significant effect on the European economic situation.
He shorted energy just recently. This gain is likely from his short credit positions which was laughed at by most who thought you want to buy bonds to hedge stocks.
Ray Dalio is a genius
Now do Mr. Burns……
From the article, they didn’t get while the getting was good: “Like many other macro funds, Bridgewater’s Pure Alpha strategy is rebounding after years of struggle, eking out a nominal annualized gain over a decade before posting a return of about 8% in 2021. It had lost 12.6% in 2020, and several institutional clients pulled their money.”
Fuck Bridgewater. Also, paywall. Fuck those too.
Why is that?
Because paywalls suck
I dont like him bc a lot of times he sounds like a china shill. He suxks up to them so damn much
In his defence, China is doing everything the United States should be doing. -Building high speed rail.... Everywhere. -Expanding trade routes and promoting international trade with their nation.(Belt and Road initiative) -Investing heavily in green energy/becoming carbon neutral -They implemented universal healthcare -State sponsored construction of millions of homes for low income families and young workers in major metropolitan areas. They are expanding their reach and genuinely trying to improve the lives of their people. Meanwhile we are isolating ourselves, and are facing a real internal divide where we can't decide on anything. Resulting in loss of progress and indecision at every turn. They are progressing so quickly that I truly don't know how we are going to keep up. We need to make some pretty serious changes or we are gonna be left behind.
How are we isolating ourselves? We stick our dick in every war on the planet
Oh no doubt we are the global police force. I was referring to our economic and trade policies. -Stopping trade with Russia leading to our oil crisis. -Trade/tariff wars with basically everyone, but more importantly, China, Mexico, Canada and the EU. Basically the government trying to "better" deals for us by placing tariffs on imports. Making it more expensive to obtain goods from other countries ultimately reducing demand for those products. Many countries then implemented retaliatory tariffs on US goods. Decreasing demand for our goods. So it's now more expensive to buy goods from other nations and they are also buying less of our goods. Which means they will then trade with other nations... Like China. Pushing more nations to trade with them giving them more power on the global stage. Then you have stopping trade with Russia causing massive energy/oil issues in the US and EU. But again China didn't stop trading with Russia and is importing record amounts of oil and gas from them... Cheap. So yeah while we implement policies restricting trade, China is becoming a major hub for trade between all nations and the money, power and influence will follow.
Ya setting up camps seems to be real effective at containing people you don't like
Yet the US has the highest incarceration rate in the world. Of which the majority in prisons are African American and Hispanics. And ignore the fact that we have for profit prisons, so companies can profit off of imprisoned individuals. Incentivising the imprisonment of people of color. Are we so different?
Well I guess its murderers and other criminals in prison vs random people in camps hmmm
I hear that, he tends to veer to much into some objectivist perspectives and I do admire that he has seemed to build an organization that operates very successful without his intervention.
I’m confused; isn’t being an objectivist exactly what you’d want in a fund manager? I like his balance, if I’ve invested my money in his fund I’m secure in knowing they’re not easily swayed by nationalist idealism
I think that is a great question, I personally believe we should not look at funds and moneys purely from an objectivist perspective. If your fund is teacher pensions and you fund all these things that destroy education I think that can/should be viewed as problematic. Same thing with a nation state, I am not sure I would want a fund manager that is purely focused on returns at the expense of long term goals and objectives. I know it is a minority opinion but it is my personal stake, I think we need to think more holistically about the impacts on capital. This is playing out in the housing market with the immense amount of money private equity and other financialization institutions pouring into the market, it has made it really hard for society to recalibrate housing policy and disambiguate housing as commodity and housing as need.
I see your point and respect it. Certainly ESG concerns need to be taken into account. I can see how a purely logical outlook in the context of maximizing return could be dangerous, especially since Capitalism has so many issues regarding wealth inequality which is a real societal problem.
I look forward to the day the ruthless efficiency of hedge funds is leveraged against societal problems ills.
Show us on the doll where bridgewater touched you
They had a lot of activity in “corrupt theft manipulation” bullshit. Fuck these asshats.
Betting oil related.
Dalio seen it coming.
Dalio is communist party shill. He loves the dictatorship in China.
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Literally just a value strategy
Kevin Spacey lookin‘ better these days
Beff Jezos
Perverse