Ray Dalio's Bridgewater Launches 'All-Weather' ETF, Bringing Decades-Old Investment Strategy To The Public

Hedge fund manager Ray Dalio’s Bridgewater Associates has launched an exchange-traded fund (ETF) inspired by its famous ‘All-Weather’ strategy.

What Happened: In partnership with State Street Global Advisors STT, leading hedge fund, Bridgewater Associates has unveiled its popular all-weather portfolio strategy as an ETF, the SPDR Bridgewater All Weather ETF ALLW.

The strategy is designed to deliver consistent returns for investors across economic environments and market cycles. It uses a risk parity approach to investment, where allocations to different assets are based on their levels of volatility.

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Created in 1996 by Ray Dalio himself, the strategy involves allocating 30% of assets into equities, 40% into long-term US Treasury bonds, 15% into intermediate-term US Treasury Bonds, 7.5% into gold, and 7.5% into commodities other than gold. During its three decades of existence, this strategy has generated a compounded annual growth of 7.5%.

While it has trailed the S&P 500, which compounded at 9% during this period, it’s worth noting that this period involved the Asian Financial Crisis, the Dot-Com Bubble, the Great Recession, and COVID-19. The metric that truly matters with all of this is the max drawdown, which stands at 20.58%, as opposed to the S&P 500’s 25%.

The entire ‘All-Weather’ strategy is set to be distributed across five separate ETFs, all managed by State Street Global. Each will feature certain variances to suit market conditions and investor preferences, but the broader goal remains resilience in the face of turmoil.

Why It Matters: The popular strategy was up until now only available for rich accredited investors or institutions who could invest a minimum of $500,000. With the launch of this ETF, however, retail investors can get in on this strategy for just $22, which is the current price of the fund.

The ETF has a expense ratio of just 0.85%, compared to the standard 2% management fee and 20% performance fee that hedge funds often charge.

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