“Evolve Or Die”: Bridgewater Enters Post-Dalio Era

Bridgewater Associates, one of the world’s largest hedge funds, is undergoing a major overhaul as it seeks to move beyond billionaire founder Ray Dalio’s investment strategies after several years of underperformance. Dalio stepped aside five months ago as CEO Nir Bar Dea told Bloomberg the fund must adapt to a rapidly changing industry or risk ‘death.’

Bridgewater is headed for a new direction under new management after 73-year-old Dalio stepped down as chief of the $138 billion firm in October. It was reported that most of Bridgewater’s gains last year were wiped out in the final two months. 

Bar Dea told Bloomberg in an interview that a new ambitious strategy is underway to boost returns, increase profitability, and develop new revenue streams — in what appears to be the most extensive restructuring of the fund in four decades. 

“Just doing what we’ve been doing isn’t good enough. 

“Evolve or die. That’s what’s happening here,” Bar Dea said. 

Dalio’s succession comes as the company has faced challenges recently, including underperformance in its flagship Pure Alpha fund. Bloomberg noted last year that Dalio stepped aside to focus on ‘philanthropy.’ 

Bridgewater plans to invest heavily in artificial intelligence and other advanced technologies to help it make more effective investment decisions as part of the overhaul. The company has also announced that it will reduce its headcount while expanding operations in Asia. 

Here are the highlights of Bridgewater’s restructuring (list courtesy of Bloomberg): 

Cap the size of its flagship Pure Alpha strategy to $70 billion, down about 30% from its historic peak

Cut about 100 jobs from its 1,300-person workforce

Launch new strategies including products that use individual stocks to express the firm’s views on macro trends

Develop more funds with Asia exposure and double its Singapore staff from 15

Expand in sustainability to bet on equities and focus on strategies to generate excess return

Create a new team under Co-Chief Investment Officer Greg Jensen that will engineer tools powered by artificial intelligence

The changes come as Bridgewater enters a post-Dalio era. Bridgewater performance might rebound after years of lackluster gains due to interest rates on a zero lower bound. Now a reversal, the firm restricts access to Pure Alpha, hoping to generate higher returns. 

“Our values as a firm are pervasive excellence and always trying to outperform,” Bar Dea said. “We want to make sure our flagship product is set up to deliver that.”

Overall, Bridgewater’s overhaul reflects the need to stay relevant and outperform the market or risk mounting client withdraws.