Ray Dalio's Bridgewater lost $12.1 billion in nightmarish 2020 - but he's still the best hedge fund manager of all time
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- Ray Dalio's Bridgewater Associates lost $12.1 billion for investors in 2020.
- But the top 20 hedge funds pulled off their biggest returns in a decade.
- Dalio is still the best-performing manager of all time, LCH Investments said.
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Ray Dalio lost $12.1 billion for investors in his Bridgewater firm in 2020, despite the world's top 20 hedge funds reaping their best returns in a decade thanks to the rapid rebound in stocks in the spring.
Nonetheless, Dalio is still the best hedge fund manager of all-time with net gains of $46.5 billion since inception, according to the latest rankings from LCH Investments, which is part of the Edmond de Rothschild group.
The top 20 managers of all time made $63.5 billion for investors in 2020, LCH said, the best returns for the group in 10 years. That was half of the $127 billion the industry as a whole made for investors, which was down from $178 billion in 2019.
"In 2020 the best hedge fund managers generated substantial returns while limiting downside risk, which is exactly what they are meant to do," said LCH chairman Rick Sopher in a statement. "2020 was the year of the hedge fund."
The most successful hedge funds profited massively from the sharp rebound in equities. Stock markets recovered rapidly from March's crash, as central banks such as the Federal Reserve pumped unprecedented amounts of stimulus into the economy.
The S&P 500 has risen around 70% since its low at the end of March 2020, powered by the big tech "growth" stocks such as Amazon, Netflix, Apple and Google.
Despite the best gains in a decade for the top 20, hedge funds on average returned 11.6% in 2020, according to Hedge Fund Research data cited by Reuters. That was less than the 16% return of the S&P 500.
Dalio's Bridgewater suffered hefty losses after failing to position adequately during the downturn and the subsequent rebound.
Dalio told Bloomberg TV in September: "We have never had a significant downturn, all positive years, but we knew that there would come a day. We missed the pandemic going down and that is the reality."
Yet Bridgewater still has the most assets under management of any hedge fund with available data, LCH's annual report said, at $101.9 billion.
Renaissance Technologies also suffered a bad year, causing it to drop out of LCH's annual list of the top 20 hedge fund managers of all-time.
Sopher said: "Conditions favoured man over machine and it was notable that Renaissance Technologies, a machine-driven manager, has dropped out of the top 20."
Tiger Global - Chase Coleman's hedge fund - entered LCH's all-time top 20 with gains of $10.4 billion. That was more than any of the other top 20 made last year.
Israel Englander's Millennium made $10.2 billion in 2020. Steve Mandel's Lone Pine was not far behind at $9.1 billion, while Andreas Halvorsen's Viking fund brought in $7 billion for investors.
Sopher said Tiger Global's gains were "generated substantially from its net long biased equity strategy".
Tiger Global, Viking and Lone Pine are all spin-outs of the Tiger Management family of funds founded by Julian Robertson.
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