Ray Dalio’s Flagship Pure Alpha Fund Fails To Claw Back Losses

Hedge fund billionaire Ray Dalio’s top fund missed out on the rebound in Sept. after it suffered losses in Aug. when positioning of the fund was caught offsides when government bond yields across the world plunged on trade war escalations between the US and China, reported the Financial Times. 

The Pure Alpha fund at Bridgewater, manged by Dalio and his associates, lost 2.30% in the nine months ended in Sept., mostly due to incorrect positioning in Aug. as government bond yields plunged worldwide, in some cases, mainly in Europe and Japan, went deeper into negative territory.

The fund is underperforming the market and peers in 2019, during the same period last year, Pure Alpha was up 6.40%.

In Sept., the fund clawed back some of its loses when it soared 3.80%, but fell again by .50% in early Oct. as market turmoil was seen.

Considering all the trade optimism President Trump has pumped into markets via tweets, Dalio’s fund has still managed to print a dismal YTD, down 2.74%.

Dalio delivered superstar returns last year, after fund fees, investors made 14.60%. 

Dalio, like many other money managers, are underperforming this year thanks to chaotic trade developments on a tweet by tweet basis. This has caused Pure Alpha to deliver one of its worst first halves in nearly two decades as it recorded 4.90% losses.

In a CNBC interview in Aug., Dalio said there’s a 40% chance of a recession in the next 24 months. He warned that central banks are out of ammo, something we outlined in the last several days. 

Dalio has since lowered his recession forecast to 25% but continues to pitch the idea that a repeat of 1937 turmoil is dead ahead. 

Last Thursday, Dalio reconfirmed his 1930s bearish apocalyptic view at the IMF and World Bank annual meetings in Washington, DC.

He told investors at the conference: “This cycle is fading, we are now in the world in what I would call a ‘great sag,'” adding that monetary policy is less effective than ever before.

Dalio’s passively managed All-Weather fund, which performs reasonably well during periods of elevated volatility, was up 13.60% for the nine months ended in Sept.