It may be almost a year since Ray Dalio, the founder of the world’s largest hedge fund, Bridgewater Associates, ‘retired’ and stepped away from the day-to-day running of the business, but his presence still looms large over the firm, according to a report by the New York Times.
The report cites five unnamed sources with knowledge of the matter as revealing that under the terms of his retirement contract, which was signed in October last year, Dalio has the option to retake control of Bridgewater if its financial performance flags.
Rather than coming back to run the firm he founded 50 years ago from his two-bedroom apartment though, the 74-year-old has floated the idea of starting a new fund within Bridgewater that he hopes would help improve the firm’s investment returns, according to the sources.
Despite returning an average 10% annually, after fees, since Bridgewater introduced an investment committee in 2020, the firm’s flagship Pure Alpha fund lost around two-thirds of its annual gain in the last three months of 2022, and has also lost money in the first half of 2023, during a bumper period for stocks. Regulatory filings meanwhile, reveal that the firm’s assets under management have fallen to around 25% of their peak.
Some of Bridgewater’s top staff and board members, including its chief executive and Dalio appointment Nir Bar Dea, have threatened to quite if he interferes believing that he might use the proposed fund as a way to reassert control and give investors a choice between backing his ideas or those of his successors.