Ray Dalio founded (and used to run) one of the world's largest hedge funds – Bridgewater Associates – back in 1973. Bridgewater is perhaps most well known for its significant outperformance during the global financial crisis back in 2008–09. It was able to do this through a strategy of 'macro-investing'.
Macro-investing involves deploying capital based on global economic factors, rather than individual stock picks.
With more than US$140 billion in assets under management, Dalio and Bridgewater are areas that many investors like to keep an eye on. Just a few days ago, we covered how Dalio is warning investors to stay away from cash and bonds as asset classes in the current economic environment.
But today, we get a rare glimpse into which investments Dalio and Bridgewater have been buying of late.
According to reporting from Business Insider, Bridgewater's 13F filing was made public earlier this week. A 13F is a regulatory filing in the United States that outlines the company or fund's current investments. All major companies and investment funds in the US have to release a 13F to the markets every quarter.
Dalio buys emerging markets, consumer staples
As reported by Business Insider, Bridgewater has been offloading investments in several exchange-traded funds (ETFs). The 3 largest funds Bridgewater is ditching are an S&P 500 fund (covering large-cap US shares), as well as 2 Chinese-based ETFs. Dalio reportedly offloaded about US$309 million in the S&P 500 ETF, and between $US12–34 million in the 2 China ETFs.
Where did this money flow to? Well, the report tells us that Bridgewater initiated large positions in 2 US giants: Walmart Inc (NYSE: WMT) and the Coca-Cola Co (NYSE: KO). He also topped up positions in McDonald's Corp (NYSE: MCD), Mondelez International Inc (NASDAQ: MDLZ) and Procter & Gamble Co (NYSE: PG).
Additionally, Bridgewater also topped up a position in Alibaba Group Holding Ltd (NYSE: BABA) – a Chinese e-commerce giant. In addition, the report tells us that the firm also bought positions in 2 emerging markets ETFs. These normally include China as well as other emerging markets like India, Russia and Taiwan.
Interestingly, Dalio has said in the past that "not investing in China is risky". So it's fascinating to see Bridgewater sell out of China ETFs and buy emerging markets funds instead.
It's also notable that Bridgewater has decreased the broad-market exposure that the S&P 500 provides in place of large investments into consumer staples stocks like Coca-Cola, Walmart, McDonald's, Mondelez and Procter & Gamble. These stocks tend to be viewed as 'defensive' due to the 'staple' nature of the products they sell, such as food, drinks and household essentials.
