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Ray Dalio on CNBC

scott
edited January 2013 in Fund Discussions
Dalio is the head of Bridgewater, the largest hedge fund on the planet.

http://www.businessinsider.com/ray-dalio-cnbc-interview-january-24-2013-1

http://www.cnbc.com/id/100403678

While Dalio believes that money will continue to flow into the market in 2013, I thought his views on an "all weather" portfolio (Risk Parity) were interesting.

From the interview:

""You're not going to win by, sort of, trying to get what the next tip is," he said. "What most [of] the investor[s] need to do is have a balanced, structured portfolio. A portfolio that does well in different environments."

Dalio said investors should have:

—A quarter of their portfolios in assets that do well when economic growth is faster-than-expected

—A quarter for when growth is slower-than-expected

—A quarter for when inflation is higher-than-expected

—A quarter for when inflation is lower-than-expected"

This "all-weather"-type portfolio is one of the two basic approaches at Bridgewater. "This has nothing to do with bets. It has to do with how to make all the assets the same risk parity."

"Betting on any market is like poker, "a zero-sum game," he said, adding that the deck is stacked against the individual investor in favor of big players like Bridgewater, which has about 1,500 employees. "We spend hundreds of millions of dollars on research … and we don't know that we're going to win. We have to have diversified bets."

Comments

  • Hiyield007Hiyield007
    edited January 2013
    I don't believe the link below was posted about Ray Dalio, Bridgewater, and risk parity funds. A good read. The returns of risk parity funds leave me a bit cold but AQR has a new one out (QRHIX) that seems to have a bit of steam. Available for $100,000 at select brokers such as Scottrade.

    http://online.wsj.com/article/SB10001424127887323301104578255641599364884.html

    Edit: never mind, the story "Money Magic, Making Bonds Act Like Stocks" is only available if you google and input it yourself.
  • scott
    edited January 2013
    Reply to @Hiyield007: AQR's Risk Parity II funds (MV and HV) are slightly different in terms of what they hold than their Risk Parity I fund, and as a result, II has more emphasis on equities.

    I: "The Fund pursues its investment objective by allocating assets among major liquid asset classes (including global developed and
    emerging market equities, global nominal and inflation-linked government bonds, emerging market fixed income, sovereign debt, the
    credit spreads of mortgage-backed securities and corporate and sovereign debt, developed and emerging market currencies, and
    commodities)."

    II: "The Fund pursues its investment objective by allocating assets among major liquid asset classes (including global developed and
    emerging market equities, global nominal and inflation-linked government bonds, developed and emerging market currencies, and
    commodities).
  • CharlesCharles
    I was wondering what the real difference was...other than AQRIX is closed to new investors. Thanks scott. I liked Dailo's profile in Hedge Fund Market Wizards by Jack Schwager.
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