Bridgewater Bets 1% of its AUM on a Market Downturn

Hedge fund manager Ray Dalio is shoring the markets. The largest hedge fund in the world – Bridgewater Associates – has a $1.5 billion bet that the markets will fall by March. The Wall Street Journal reports that these wagers will pay if either the Euro Stoxx 500 or S&P 500 decline.

The article says that Dalio’s firm has been buying puts through Goldman Sachs and Morgan Stanley. The wagers came at a time that Dalio expressed bearishness on the global economy. Dalio has warned of a “paradigm shift” and raised concerns about income inequality. He has also cited efforts by central banks to stave off economic recessions.

Bridgewater Associates paid about $1.5 billion for its put options on the markets. This figure represents about 1% of its total assets under management.

Hedge Fund Manager Ray Dalio on “The Big Short”

Dalio’s firm released a statement to CNBC after the Journal’s report.

“Though we won’t comment on our specific positions we do want to make two things clear,” Bridgewater said in a statement to CNBC. “First, the way we manage money is to have many interrelated positions, often to hedge other positions, and these change often, so that it would be a mistake to look at any one position at any one time to try to deduce the motivation behind that position.”

The statement continued on political issues.

“Second, we have no positions that are intended to either hedge or bet on any potential political developments in the U.S.,” the firm added.

Related: Ray Dalio: An Economic Downturn Could Lead to Depression-Like Conditions