Risk-parity blues: Investors exit as Dalio’s once-lauded strategy stumbles

Ray Dalio's once-lauded risk-parity strategy, a hallmark of Bridgewater Associates, is facing investor exodus after years of underwhelming returns. Initially heralded as a safeguard post-2008, these funds have struggled in recent years, prompting large institutions like public pensions to withdraw billions. Despite Dalio's long-term optimism, market shifts and lacklustre performances have led to scepticism, with alternatives like active risk management gaining traction. As investors weigh past disappointments against future uncertainties, the fate of risk parity in an evolving market landscape hangs in the balance.

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By Justina Lee

It was an irresistible pitch. Give us your money, executives at Ray Dalio's Bridgewater Associates and other hedge funds said, and we'll funnel it into a money-minting, sure-thing strategy for the long haul. But now, after five years of sub-par returns, many of the institutional investors who sunk large sums into risk-parity funds, as they're known, are demanding the money back.

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