Ray Dalio is credited with being the first hedge fund manager to separate alpha and beta.
Alpha is the return over and above the market return. Beta is matching the overall market return.
Bridgewater’s two primary investment funds focus on these strategies, with the All Weather fund focusing on beta and the Pure Alpha fund focusing on alpha.
An all-weather fund is a fund that tends to perform reasonably well during both favorable and unfavorable economic and market conditions.
According to the U.S. Securities and Exchange Commission, Bridgewater Pure Alpha Funds is an Other Investment Fund in the British Virgin Islands, that has raised $11.45B from 173 investors, with a minimum investment of $100K, for an equity fund started in Jul 2000.
Focusing on either alpha or beta has allowed Dalio to produce some strong returns.
In this video, he explains the two investment strategies.
