Bridgewater's Flagship Fund Falters as Another Thrives

Bridgewater Associates LP's flagship hedge fund dropped about 12% through the end of June, according to people familiar with the firm. That marked the worst start to a year for the Pure Alpha fund since 1995. Pure Alpha bets on and against markets world-wide in an effort to stay ahead of macroeconomic trends.

Meanwhile, the firm's slightly smaller All Weather fund rose 10%, according to these people. All Weather uses a risk-parity strategy intended to adapt to a number of market conditions.

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Bridgewater's billionaire founder, Raymond Dalio, has been outspoken in predicting an eventual economic crunch. In a client note this spring reviewed by The Wall Street Journal, he said "the global economy is slowly moving toward an inflection point" that will be reached within the next year. In that note, he repeated his longtime thesis that persistent low central bank interest rates will be increasingly ineffective in boosting economies world-wide.