Bridgewater Associates

ASHWIN ANANTH, FREDERICO CARNIERO MIRA GODINHO, JOSEPH CLARK, MICHAEL HASLETT,

JIANI HE, LANYU LIU, JINGHAN ZHANG

Agenda Overview

History and Milestones

Products and Services

Strategies

Management Principles and Management Structure

Financial Performance

Future Plans

Conclusion

Overview World’s largest macro hedge fund

◦ AUM: US$ 169 billion

Institutional Clients◦ Governments and Central Banks◦ Pension Funds◦ Endowments – Univ. and charitable

Founder Ray Dalio◦ Innovative quantitative strategies◦ Unique management philosophy

HQ: Westport, CT

Ray Dalio

History and Milestones

1975 1980 1985 1991 1996 2006 2009 2014

Founded by Ray Dalio in his Manhattan apartment

Founded the Bridgewater

Optimal PortfolioComplete focus on

alternative strategies

Launched its Pure Alpha

fund

α

Daily Observations

Turn to Money Management of

institutional investors

Launched its All Weather

fund

βLargest hedge fund firm in the world

Awards and Achievements

2000 2002 2003 2004 2006 2009 2011

“Best Performing Global Bond

Manager"

“World’s Best Money

Manager”

“Global Investor for Excellence

Global Bonds”

“Currency Overlay

Manager of the Year”

“Lifetime Achievement

Award”

“Industry’s Lifetime

Achievement”

“World’s Top Hedge Fund”

Products and ServicesPure Alpha (2 and 20 pricing)

◦ Flagship fund◦ Portable Alpha-based strategy

Daily Observations◦ First product offered◦ Readers include: Barack Obama, International

Central Bank leaders

All Weather◦ Low fees, global portfolio◦ Primarily fixed income and currency

positions◦ Seeks to match overall market return (β)

Pure Alpha Major Markets◦ Largest hedge fund launch at US $7.5 billion

(2011)◦ Alpha-based strategy, but higher liquidity

using shorter-term debt

General Strategy Ray Dalio

◦ Macro Economist who invests in Bonds◦ Doesn’t trust one commodity or market

◦ Keeps a spread across asset classes and countries◦ Consistent hitter of singles and doubles – no

big bets

Focus on Buyers and Sellers◦ Macro approach to research

Broadly: Illiquid positions / uncorrelated investments◦ Decrease correlation by risk diversification, not

asset diversification

Full agreement: Dalio, Jensen, and Price◦ Driven by rules-based framework

Pure Alpha Strategy Pure Alpha fund

◦ Portable Alpha strategy◦ Eliminating beta (market risk) across a portfolio of 30 to 40 positions

◦ Active management with daily assessment and trades

Management Principles and Management Structure

• Management Principles:• Culture• Founder’s Basic Principles• Management Principles

• Management Structure:• Horizontal structure

Culture◦ Truth and excellence constant

improvement

◦ “Radical transparency”

◦ Assertive, open-minded, innovative

Basic Principles◦ Reality + Dreams + Determination = A Successful Life◦ Pain + Reflection = Progress◦ The quality of our lives depends on the quality of

the decisions we make

◦ to work for yourself◦ to come up with independent opinions◦ to stress-test them◦ to be wary about being overconfident◦ to reflect on the consequences of your decisions

and constantly improve

Management Principles• Great culture + Great people

How to achievethe goals Culture

• Organizations are like individuals• How they choose to approach these

impediments determines hoe fast they can move towards their goals.

• Organization is like a machine—Feedback Loop• Produces outcomes• Compare results to the goals• Assess and improve how it works

Horizontal Corporate Structure ◦ Well-trained workers will be more productive -- more directly involved in the

decision making process

◦ Comments and feedback are more efficient

◦ Has few or no levels of middle management between staff and executives

◦ Aims to remove the barriers associated with traditional asset management firms, and qualities like stodginess and risk-aversion are discouraged

Major Players

0.00%1.00%2.00%3.00%4.00%5.00%6.00%

Market Share of Peers

Source: IBISWorld

Financial Performance

Source: IBISWorld

2010 2011 2012 2013 2014 20150

0.5

1

1.5

2

2.5

3

3.5

4

4.5

1.6

2.73 3.1

3.53.9

Revenue (Billion)

Financial Performance

Source: IBISWorld

2010 2011 2012 2013 2014 20150

20

40

60

80

100

120

45

76.184 87.1

99.7110.4

Assets (Billion)

Future Plans◦ Algorithm trading

◦ Start the artificial-intelligence team

Thank you!

To make money in the markets, you have to think independently and be humble. You have to be an independent thinker because you can’t make money agreeing with the consensus view, which is already embedded in the price. Yet whenever you’re betting against the consensus, there’s a significant probability you’re going to be wrong, so you have to be humble.

@RayDalio