World’s biggest hedge fund falls out of favour with Singapore bank

SINGAPORE: Ray Dalio’s Bridgewater Associates LP, the world’s biggest hedge fund, has fallen out of favour at a Singapore-based private bank that advises some of Asia’s wealthiest people.

UOB Private Bank, a unit of Southeast Asia’s third-largest lender, recommended around mid-year that clients pull their money from Bridgewater, Chief Investment Officer Neo Teng Hwee said.

“The one that has not done really well for us is Bridgewater,” Neo said in an interview Tuesday. “Previously we used to like it and it was high conviction, but now we’ve removed them from high conviction.”

The call comes amid a tough year for Dalio’s firm, which manages about US$160 billion in assets. Its flagship Pure Alpha fund has failed to impress, losing 6% this year through Aug 23, even as its macro rivals enjoy a rebound.

Bridgewater’s under-performance was the biggest driver behind the shift in sentiment and recommendation, Neo said.

It was also worrying that Dalio’s public comments don’t always match the firm’s investment decisions, though he acknowledged this was partly because it has different teams running various strategies.

In October, Dalio said the world economy is under threat from an explosive mix of ineffective monetary policy, a rise in the wealth gap and climate change. The combination will lead to a “scary situation” over the next decade, he said.

Neo said UOB’s best hedge fund investment recommendation has been H20 Asset Management, even though the UK-based firm has been beset by a spate of negative publicity that has seen outflows of billions of dollars.

“The one that has done the best for us is H2O,” Neo said. According to Bloomberg data, the H2O MultiBonds fund has risen 34.7% this year. “We know them very well, I know the owner very well and they’re just amazing.”

Speaking at a UOB event, Neo made a broad suggestion to increase investments in alternative assets through 2020, including hedge funds, some private equity allocations and commodities.

UOB ranked 14th among Asia ex-China private banks and managed US$34 billion of clients’ assets in 2018, according to data from Asian Private Banker.