The 13f filing of Bridgewater Associates, the hedge fund managed by billionaire investor, Ray Dalio with the Securities and Exchange Commission (SEC) showed that its investments were largely concentrated on Exchange-Traded Funds (ETFs) during the fourth quarter of 2012.
Based on its Q4 portfolio, Bridgewater Associates’ investments represent 87.9 percent. Its equity investments were minimal with 3.9 percent in technology, 2.9 percent in the services, 1,7 percent in basic materials, 1.3 percent in health and consumer goods, 0.7 percent and 0.3 percent in financial and utilities sectors respectively.
The hedge fund’s assets under management (as per shown in the 13F) increased from more than $7.4 billion to approximately $9.8 billion. The hedge fund in total manages well over $100 billion.
Bridgewater Associates’ top five stockholdings in the fourth quarter include Vanguard MSCI Emerging Markets ETF (NYSEARCA:VWO) with a 30.53 percent stake; SPDR S&P 500 ETF Trust (NYSEARCA:SPY) with a 29.42 percent stake; iShares MSCI Emerging Markets Indx (ETF) (NYSEARCA:EEM), with a 25.6 percent position; iShares MSCI Brazil Index (ETF) (NYSEARCA:EWZ) and iShares IBoxx $ Invest Grade Corp Bd Fd (NYSEARCA:LQD) with a 0.45 percent position.
In an interview with Foreign Affairs Magazine with Jonathan Tepperman, Ray Dalio explained, “The age of big returns is over, of asset classes in general, and that’s true of bonds. That’s true of stocks. For structural reasons, and that has to do with when interest rates go down, it causes stocks and bonds to go up. And when interest rates go down to zero, there is not much more room for those assets to benefit from declining interest rates. So when we look at high returns of stocks, what we had is an expansion in P/Es which are yields coming down, and that is all over for a relatively long time. There are going to be ups and downs, but what produces the high returns is structurally no longer there.”
During the quarter, Bridgewater Associates acquired 170, 290 shares of Barrick Gold Corporation (NYSE:ABX), 16,868 shares of American Eagle Outfitters (NYSE:AEO), 30,441 shares of Agnico-Eagle Mines Limited (NYSE:AEM), 260,511 shares of The AES Corporation (NYSE:AES) and 137,000 shares of Yamaha Gold, Inc (NYSE:AUY). The hedge fund boosted its stake in Apollo Group Inc (NASDAQ:APOL) by 867,151 shares to 1,848,684 shares and its holdings in Bank of America Corp (NYSE:BAC) by 87,700 shares to135, 171 shares.
The hedge fund sold out its positions in Yahoo! Inc. (NASDAQ:YHOO), BCE Inc. (NYSE:BCE), 3M Co (NYSE:MMM), Electronic Arts Inc. (NASDAQ:EA), and Microchip Technology Inc. (NASDAQ:MCHP).
Most recently, Dalio’s co-chief investment officer, Bob Prince said that Bridgewater Associates is shorting the Japanese yen. According to him, “We are bullish on sterling, largely related to differences in capital flows and the impacts of monetary policy between the U.K., Europe and United States.” On the other hand, the hedge fund is bullish in on other currencies including the British pound sterling, Korean won, Mexican peso, and Russian ruble.