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Bridgewater, one of the world’s largest hedge funds, is joining forces with State Street’s asset management arm to tap retail investors in the latest effort by money managers to look for new customers beyond their traditional strengths.
The partnership announced on Tuesday will start with an exchange traded fund that will track one of Bridgewater’s best-known strategies. State Street Global Advisers has filed plans with the US Securities and Exchange Commission for an “All-Weather” ETF, which seeks to profit in all types of market conditions by holding a wide range of assets.
If approved by the regulator, it will be sub-managed by Bridgewater using its “risk parity” strategy, which uses leverage to weight assets by expected volatility. Once it starts trading, the ETF could offer other investors new insights into Bridgewater’s famously secretive methods.
The two groups also announced a larger partnership aimed at enlarging the potential market for complex products including hedge funds and private equity and credit.
It is part of a stampede by traditional asset managers such as State Street to strike such agreements with the big names in alternative assets. In the past six months, there have been tie-ups between Capital Group and KKR, BlackRock and Partners Group, and SSGA has a separate partnership with Apollo.
The alternatives managers hope to reach wealthy individual customers at a time when the institutional investors are holding firm or cutting back on their complex investments. The traditional managers want to stay relevant as retail customers and their advisers move into new sectors and like the higher fees these products can command.
“Bridgewater is known for its 40-year history of delivering resilient, diversified portfolios and insights to many sophisticated institutional global investors,” Anna Paglia, State Street Global Advisor’s chief business officer, said. “This strategic relationship will now bring that portfolio construction expertise to retail investors as well.”
State Street, which invented the ETF, is best known for its low-fee passive funds but the $4.7tn money manager is making a big push into racier products, with more than 80 launches since Paglia’s arrival earlier this year. They include ETFs focused on digital assets and one done in conjunction with Apollo to invest in public and private credit.
Bridgewater, which was founded by Ray Dalio, is attempting to rebuild after a difficult period that included a stormy succession process and poor returns accompanied by significant outflows. People familiar with its results said it had $100bn under management at the end of August, well below its all-time peak of $160bn. Its flagship Pure Alpha fund sustained large losses in 2022 and 2023.
The new ETF seeks to follow the strategy behind Bridgewater’s other well-known product, the All Weather hedge fund.
“At Bridgewater, we see global investors increasingly focused on portfolio resiliency and desiring durable client portfolios,” Karen Karniol-Tambour, Bridgewater’s co-chief investment officer, said. “We are excited to broaden access to our approach.”
Both companies declined to comment beyond their official statements, citing SEC rules that bar investment managers from discussing specific products before they have been approved.
