Dalio’s Risk-Parity Trade Loses Allure Among Investors

It was an irresistible pitch. Give us your money, executives at Ray Dalio’s Bridgewater Associates and other hedge funds said, and we’ll funnel it into a money-minting, sure-thing strategy for the long haul, reported Justina Lee for Bloomberg News.

Bridgewater founder, Ray Dailo. After five years of subpar returns, many institutional investors who sunk large sums into risk-parity funds, as they’re known, are demanding their money back. I Photo: Bridgewater

But now, after five years of subpar returns, many institutional investors who sunk large sums into risk-parity funds, as they’re known, are demanding their money back.

Investors, including public pensions in New Mexico, Oregon, and Ohio, have pulled out cash, slashing the size of the funds by an estimated $70 billion from their peak three years ago.

For many, the pleas from firms for more time — that the next decade in markets is unlikely to resemble the last — ring hollow.