(Bloomberg) – Bridgewater Associates founder Ray Dalio’s all-weather strategy is coming to the exchange traded fund market.
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State Street Global Advisors plans to create the SPDR Bridgewater All-Weather ETF, according to a regulatory filing Tuesday. The fund is sub-advised by Bridgewater, which provides a daily model portfolio specific to this product.
The move marks the latest example of hedge funds expanding into ETFs. ETFs have mushroomed into a $14 trillion global market thanks to ease of trading, tax benefits and generally low fees.
All Weather, which was first launched in 1996 to manage Dalio's trust assets, is a so-called risk parity strategy that allocates across assets based on volatility. The idea is that instead of accumulating risky assets such as stocks in the pursuit of large profits, a portfolio should be diversified into bonds, products, etc., and utilize safer investments to achieve similar results with less risk. is that it can be achieved. Bridgewater reiterates this approach, focusing on maintaining a balance of assets that weathers the ups and downs of business cycles.
“We believe that diversifying your asset allocation is a great step to preparing for the future, and we believe that diversifying your asset allocation is a great step to preparing for the future, and we believe that investments like State Street Global Advisors We are excited to work with innovative organizations to expand access to our approach.” Associates announced in a press release Tuesday that the two companies have entered into a “strategic relationship” to expand alternative asset investments.
Investor interest in such diversification strategies has waned in recent years as stocks have fallen behind the S&P 500 index. When stocks and bonds took a hit in 2022 due to inflation and Federal Reserve rate hikes, risk parity declined as well due to higher than normal debt allocations. Wealthfront announced this month that it would close its $1.3 billion risk parity fund, and its pensions are also cutting allocations.
S&P's Risk Parity Index, which targets 12% volatility, is up 3% this year, compared to 11% for the Bloomberg index, which is 60% stocks and 40% bonds. The S&P 500 was up about 24% through Monday's close.
The fund's fees and ticker are not yet listed. Karniol Tambour and Christopher Ward of Bridgewater will be responsible for creating the model portfolio, while a team led by SSGA's James Kramer will be responsible for the day-to-day management of the fund.
