Could Bridgewater Be Marketing to Family Wealth?

December 19, 2011

Could Ray Dalio’s Westport-based Bridgewater Associates be going after family wealth with his new All Weather Portfolio III fund? That’s the question raised in a Connecticut Post article recently.

It’s a result of Bridgewater listing a bargain buy-in price of $100,000 in a U.S. Securities and Exchange Commission filing this past week. Some industry insiders thought it was a bit low, considering the $125 billion hedge fund caters to wide array of institutional clients, including foreign governments and central banks, corporate and public pension funds, university endowments and charitable foundations.

But it may not be as unusual as it seems. “Out of about 5,000 single-strategy hedge funds in our database, about 25 percent have minimum of $100,000 or less,” said Josh Charney, Morningstar alternative investments analyst, in the article.

“With that said, the industry trend nowadays seems to be for funds to position themselves to reach a larger audience of potential investors. For some companies, that means opening similar strategies in mutual fund form, for others, lowering the barriers to enter — the fund — is a viable option.”

It may be a particularly smart hedge fund marketing move in this environment. Volatility in equity markets and worries over the European debt crisis have put investors on edge. What’s more, competition continues to heat up for clients. Roughly 1,200 new hedge funds launched in 2011, while 700 closed their doors, according to data from Hedge Fund Research.

With so many choices in hedge funds, it makes sense for funds to expand into other “client classes.” It may also push hedge funds to boost their marketing efforts more than they have in the past.

Ray Dalio’s Bridgewater Associates will not have a problem finding new clients among wealthy family offices. His reputation and continued success at the leading edge of hedge fund investing are still intact. As one admirer put it, he’s the “Michael Jordan” of hedge fund investing.

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