Ray Dalio’s fund more bullish on US equities
Bridgewater is one of the largest macro funds in the world and managed US$138 bn AUM (asset under management) as of Apr 2020, according to Barrons. Ray Dalio is the founder and co-CIO of Bridgewater, and is a popular author, KOL and philanthropist.
According to Bridgewater latest 13F filing dated 30-Sep, we expect that the fund is getting bullish on US equities. Since 1Q19 filing, the value of the fund reported US equity holding has been falling in 4 consecutive quarters, although the number of holding has been increasing to the peak level 471 in 4Q19. 13F filing showed Bridgewater has been reducing positions in the US equity. 3Q20 is the first quarter that the fund increased both NAV and number of holdings at the same time. We perceived that Bridgewater is more bullish and has allocated more capital on the US equities market.
Bridgewater diversified its portfolio in 3Q20. Top 10 holdings as a percentage of total portfolio declined from 68% in 2Q20 to 54% in 3Q20 and top 50 holdings declined from 91% in 2Q20 to 83% in 3Q20. Among top 50 holdings, Bridgewater increased the number of shares held of 25 equities, only reduced shares held of 9 equities and 14 of top 50 equities are new holdings.
Big bet on consumer, China as Top holdings , Gold remains key holdings
In 3Q20, ETF is the top equity category. Among top 50 holdings, Bridgewater owned 14 ETFs, accounting for 55.5% of total portfolio (including 15.1% gold ETF), but the weighting in 3Q20 declined from 80.4% in 2Q20. It is because Bridgewater made a significant bet on US consumer names, mostly consumer staples companies. 11 out of 14 new holdings among Top 50 holdings are consumer names, equivalent to 10.7% of the total portfolio. Key holdings include Walmart (WMT US, No. 7, 2.3% of portfolio), Procter & Gamble (PG,9, 2.0%), Coca & Cola (KO, 18, 1.2%), Johnson & Johnson (JNJ, 19, 1.2%), Pepsico (PEP, 20, 1.2%).
Bridgewater co-CIO Ray Dalio has explicitly and repeatedly stated their strong interest in the China market and their strong belief in China economy growth and the strength of Renminbi. In 3Q20, China ADRs accounted for 12.9% of Bridgewater total portfolio (Top 50: 12.2%), up from 11.0% in 2Q20. If including direct holdings through various ETFs, all China holdings should represent 18.4% of the total portfolio, up from 17.3% in 2Q20. Since 13F only discloses US equity holding, we expect Bridgewater should own additional China equities listed in Hong Kong and A-shares through Stock Connect. Among all China holdings, Alibaba (BABA, No. 4, 4.7%) was the top individual stock held, followed by JD.com (JD, 16, 1.6%), Pinduoduo (PDD, 21, 1.0%).
Finally, Gold remains a top holding of Bridgewater and represented 15.1% of the total portfolio, down from 19.8% in 2Q20. Bridgewater maintained its Gold holding through two Gold ETF, Spdr gold trust (GLD, No. 2, 15.4%) and Ishares gold trust (IAU, 5, 4.5%). Since Gold remains a top holding of this mega fund portfolio, investors should consider to own Gold for portfolio diversification.
Bridgewater's increased bet on US equities, in particular US consumer names and China equities, sent a positive message to the US equity market.