Bridgewater Associates is poised to launch a more liquid version of its Pure Alpha hedge fund strategy, which is closed to new investors.
Bridgewater's Pure Alpha Major Markets strategy will make its debut within the next few months, Robert Prince, co-chief investment officer, wrote in an e-mail response to questions.
Mr. Prince stressed in his e-mail that the developed markets approach is “not a new strategy. It is a limited extension of the capacity of existing Pure Alpha for existing clients. It (uses) the same indicators and markets, just (makes) moderately bigger trades in the bigger markets and no change in the smaller ones.”
The new approach will be open only to existing investors in the original Pure Alpha approach, who will be permitted to divide their investment between the original and new versions of Pure Alpha, depending on available capacity.
Bridgewater developed Pure Alpha Major Markets in order to retain client assets that are being returned to investors in Pure Alpha, which has reached capacity. Bridgewater doesn't disclose Pure Alpha's size limit, Mr. Prince wrote in his e-mail.
Assets in Pure Alpha have increased to $58 billion as of Aug. 1, an increase of $14 billion, or 32%, since Dec. 31.
A recent client communication from Bridgewater obtained by Pensions & Investments, said: “As we plan to return profits from our Pure Alpha strategy, due to being above our conservative capacity targets, Pure Alpha Major Markets is a potential option for clients wishing to reinvest returned assets with Bridgewater.”
“Because we are not looking to raise assets and we are otherwise closed to new business … this is a good way to create a limited accommodation to existing clients whose PA (Pure Alpha) assets have risen as a result of good performance (e.g. we are up about 20% this year),” Mr. Prince said in his e-mail.
Client demand was not behind Bridgewater's decision to carve out the more liquid strategies from Pure Alpha into a stand-alone investment strategy, Mr. Prince added.
Details will be in the Aug. 23 issue of Pensions & Investments.