Dalio’s Bridgewater Hedge Fund Grabs IEMG, IVV

Filings for the $124 billion fund reveals how cheap beta in ETFs can be leveraged.

Wealth Management Editor
Reviewed by: etf.com Staff
Edited by: Ron Day

Ray Dalio’s Bridgewater Associates LP, the world’s largest hedge fund, is leaning on exchange-traded funds for cheap, broad market exposure, according to the firm's latest 13F filings.

Low-cost and liquid ETFs are typically on a different spectrum than the more expensive and illiquid world of hedge funds. But that doesn’t mean their paths won’t cross.

The fact that the top two holdings of the world’s largest hedge fund are ETFs is a telling indicator that cheap market beta is becoming an increasingly effective tool of strategies infamous for charging 2% management fees on top of a 20% performance fee.

Bridgewater, which manages $124 billion in assets, has a 5.5% weighting in the iShares Core MSCI Emerging Markets ETF (IEMG) and a 5.3% weighting in the iShares Core S&P 500 ETF (IVV), according to U.S. News & World Report. The giant hedge fund’s next largest holding is Procter & Gamble Co. at 4.2%.

Notably, the hedge fund’s ninth-largest holding, according to the most recent 13F filing, is the SPDR S&P 500 ETF Trust (SPY) at 2.6%.

Dalio's Bridgewater Finds Appeal in Cheap Beta

The appeal of cheap beta by some of the most exclusive investment managers is certainly not unique to Bridgewater. But the recent disclosures could make some investors think twice about fees and strategies.

Consider Bob Elliott’s ambitious undertaking. Elliott spent nearly 15 years as Deputy Chief Investment Officer of Bridgewater before co-founding investment firm Unlimited in October 2022 to launch….wait for it….an ETF.

“The 2-and-20 businesses are great for the manager and not that great for the investors because the managers take all the alpha in fees,” Elliott said.

Elliott introduced his new firm with the rollout of Unlimited HFND Multi-Strategy Return Tracker ETF (HFND), which is a portfolio of ETFs managed to replicate the aggregate performance of the hedge fund industry, gross of fees.

HFND, which applies artificial intelligence to manage exposure to six underlying hedge fund strategies, will be followed by eight focused hedge fund strategy ETFs currently awaiting approval by the Securities and Exchange Commission.

With an expense ratio of 1.03%, HFND is on the pricier side in the ETF space, but Elliott hopes investors and financial advisors will compare it favorably to what’s available in the hedge fund space.

Contact Jeff Benjamin at [email protected] and find him on X at @BenJiWriter  

Jeff Benjamin is the wealth management editor at etf.com, responsible for coverage related to the financial planning industry. This includes writing, hosting podcasts, webinars, video interviews and presenting at in-person events.

Jeff is a veteran journalist with more than 30 years’ experience covering the financial markets. He has won more than two dozen national and regional awards for his reporting. He most recently worked as a senior columnist at InvestmentNews where he wrote about investment products and strategies, as well as the broader financial planning industry. Prior to that, Jeff worked as an analyst at Cerulli Associates where he researched and wrote reports on the alternative investments industry. Jeff also worked as a money management reporter at Dow Jones Newswires, where he covered the mutual fund industry.

Based in North Carolina, Jeff is a former Marine and has a bachelor’s degree in journalism from Central Michigan University.