Ray Dalio’s Bridgewater Associates is having quite a year. The hedge fund’s flagship fund, Pure Alpha II, has returned 32% through the first half of the year. Pure Alpha II operates as a macro-based fund that invests in instruments like stocks, corporate credit, commodities and currencies.
During June, the flagship fund returned 4.8%. Since its inception in 1991, the fund has seen an annualized return of 11.4%.
Meanwhile, the S&P 500 declined by about 20% during the first half of 2022, its worst six-month start to a year since 1962. That means Pure Alpha II has outperformed the benchmark index by more than 50%.
However, this year’s return comes on the heels of two years of underperformance. Let’s get into the details.
Pure Alpha II Returns 32%
In 2020, Pure Alpha II lost 12.6% as the world was introduced to the coronavirus pandemic. However, the market largely recovered during the second half of the year and gained an impressive 16%. Last year, the flagship fund returned 8%, still underperforming the S&P 500’s return of almost 27%.
Now, Pure Alpha II seems to be back with a vengeance. Bridgewater is the world’s largest hedge fund, boasting assets under management (AUM) of about $150 billion. A person close to the firm stated Bridgewater has profited in about 65% of the markets in which it trades. Other funds that Bridgewater manages include long-only and short funds.
Dalio disclosed last month that he has upped his European short bet to $10.5 billion from $5.7 billion. The short bet is split up against 28 European companies, all of which are included in the Euro Stoxx 50 Index. Some of his short bets include ASML (NASDAQ:ASML) and Adidas (OTCMKTS:ADDYY).
Ray Dalio Bets Big on These Five Stocks
Bridgewater has an average holding period of 4.2 quarters and a top 10 holdings concentration of 33.9%. The fund’s top positions include several exchange-traded fund (ETFs) that seem to offer relatively safe and stable returns.
- Vanguard Emerging Markets ETF (NYSEARCA:VWO). The fund increased its position by 35%, or 5.91 million shares, during the first quarter.
- Proctor & Gamble (NYSE:PG). The fund increased its position by 31%, or 1.63 million shares, during Q1.
- iShares Core MSCI Emerging Markets ETF (NYSEARCA:IEMG). The fund increased its position by 92%, or 7.67 million shares, during Q1.
iShares MSCI Emerging Markets ETF (NYSEARCA:EEM). The fund increased its position by 120%, or 10.71 million shares, during Q1.
SPDR S&P 500 ETF Trust (NYSEARCA:SPY). The fund’s SPY position remained unchanged during Q1.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.