Bridgewater Associates Chief Executive Officer Nir Bar Dea warned investors of becoming too overconfident in their positions as geopolitical risks impact markets around the world.
Bridgewater has been working with clients to stress test their portfolios amid tensions around the world, Bar Dea said at the Qatar Economic Forum.
“The biggest mistake I think that investors make is they develop overconfidence,” he said from the event held in Doha. “My advice to investors here is don’t use the playbook for the last 10 to 15 years for the next 10 to 15 years.”
Bar Dea was named sole chief executive officer of Bridgewater last year and quickly embarked on an ambitious strategy meant to increase the company’s profitability by capping the size of its flagship funds, ploughing more money and talent into artificial intelligence and expanding in Asia and in equities.
Many executives within the firm have applauded the changes, though some investors are frustrated by poor returns going back years, Bloomberg News previously reported.
After a decade of lacklustre performance — including a 7.6% drop in 2023 — Bridgewater’s Pure Alpha fund gained almost 16% during the first quarter, beating a 5.4% return in average macro hedge funds tracked by Bloomberg.
Bar Dea, who first joined Bridgewater in 2015, said he believed capital will soon begin pouring into the Gulf region as it continues to expand. “Everybody’s watching and seeing the innovation and the ability to build incredible things and capital will soon follow,” Bar Dea said.
Bridgewater has 400 staffers focused on mapping out how certain events will impact markets and the firm still gets 40% of its calls wrong, Bar Dea said.
The Federal Reserve will likely have a tough time clamping down on inflation in the US and will have to use more restrictive monetary policy to get prices under control, Bar Dea said.
Dina Powell McCormick, who joined the merchant bank BDT & MSD Partners last year from Goldman Sachs Group Inc, predicted high levels of inflation are likely to be the deciding factor for many voters in the upcoming US presidential election.
In her most recent stint at Goldman, Powell McCormick was running Goldman’s sovereign business. She first joined the New York-based bank in 2007 but left the bank to work for former President Donald Trump as deputy national security adviser before returning to Goldman in 2018.