From Pragmatic Capitalism:

FinAlternatives is reporting that Ray Dalio's massive hedge fund, Pure Alpha II, is up 25%-plus this year.

For those who aren't familiar, that's the world's largest hedge fund at $122 billion steering itself to a smooth 25% YTD gain. At first, this appears unfathomable. How can such a large fund steer itself around like a jet boat when it is in fact a battleship? When you begin to understand the methodology behind Bridgewater's approach you begin to see why this is possible.

As a macro fund, Bridgwater isn't dealing in illiquid individual securities. They're dealing in the world's largest and most liquid markets. So while $122 billion might seem like a big figure, they're really placing macro bets in markets that are hundreds if not thousands of times larger than they are. They might be a big fish in the hedge fund world, but they're a small fish in the markets they deal in. And that's part of the genius behind their approach.

We can connect the dots on much of their success this year by looking at some of their larger holdings. Earlier this year Bridgwater disclosed some of their larger bets...

Read full article...

More on hedge funds:

Top manager Tepper's new favorite dividend stocks

What some of the world's greatest investors are doing now

A fantastic opinion piece on John Paulson's "epic disaster" in China