Ray Dalio fans have a new way to incorporate the investing guru’s strategies into their ETF portfolio.
State Street Global Advisors and Bridgewater Associates on Thursday launched the SPDR Bridgewater All Weather ETF (ALLW)—a fund bringing Bridgewater’s “all weather” risk parity approach to retail investors looking for portfolio resilience during market turmoil.
The strategy, which was developed by the hedge fund under Dalio’s leadership almost 30 years ago, aims to provide exposure to different markets and asset classes to create a portfolio that can be resilient across a wide range of market conditions and environments, according to the fund’s prospectus.
The actively managed fund comes with an expense ratio of 0.85% and invests based on a daily model portfolio provided by Bridgewater, according to a news release announcing the fund’s launch.
The portfolio allocates assets based on the hedge fund’s views of cause-effect relationships and, specifically, how those asset classes react to growth and inflation changes. State Street will buy and sell the fund’s investments, which can include a range of global asset classes, including domestic and international equities, nominal and inflation-linked bonds, and commodity exposures.
The fund’s launch comes as markets face the very volatility the “all weather” strategy aims to help investors navigate, due in part to concerns around inflation and tariffs. It also continues to expand State Street’s alternatives lineup following last week’s Securities and Exchange Commission approval for the firm’s private credit ETF with Apollo Global Management.
While risk parity in general enhances diversification, it “heavily depends on a manager’s ability to accurately measure and estimate asset class correlations and risk,” Rob Kane, director of alternative investments on Commonwealth Financial Network’s investment management and research team, told etf.com.
He added that this becomes especially challenging in a high-inflation, rising-rate environment where traditional diversification between equities and fixed income breaks down, as was the case in 2022 when a wide range of risk parity managers struggled.
“Risk parity is not a one-size-fits-all solution, and investors must weigh the benefits of diversification against the challenges of a market environment where inflation concerns persist and correlations among major asset classes remain elevated,” said Kane, speaking generally of risk parity and not ALLW in particular.
