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There are a handful of new ETF's that are not me too or highly speculative. This has been trading for 2 days with large volume. Bridgewater is a top quality hedge fund with a long history. It appears they are not charging hedge fund fees. Might buy a starter position next week to see how it trades.
ALLW may invest across a range of global liquid asset classes, such as: 1) Domestic and international equities 2) Nominal and inflation-protected bonds 3) Commodities directly and/or through the use of derivatives.
Mitch, thanks for the 'heads up'. First thing I did when I saw your post was to visit their website, to check out how the fund has deployed capital..
their website shows 181% allocated (?) I don't see any mention of how exactly they are managing that feat. Are they shorting cash? I've no idea. The website doesn't seem to say... Whoever set up their website should have that easily identifiable. I see too, its showing its price at a 0.45% premium as of 3/6 === which is not the last trading day. So its 'stale' info. An ETF's calling card is its webpage. This webpage seems to be a 'work inprogress.
The ER is 0.85% It looks like their big stock, bond holdings are other SPDR ETFs.. which are ETFs any DIY'er can buy themselves without paying ALLW for the 0.85% management.
Their fact sheet lays out the investment framework, which includes equities, nominal bonds, TIPs, commodities, and gold -- all in different admixtures, depending on what growth and inflation are doing.. Whether ALLW adds value is dependent on how well they react at inflection points in capital markets.
Just my 'first take'. Maybe they will prove themselves over the ensuing months.
I think Mr. Dalio is likely playing golf these days, having recently handed over the reigns at Bridgewater. Probably rubbing elbows with our grand leader. They have both gone broke at various times.
There’s not a lot of information out there yet. Much of what is out is highly promotional in tone. FT recently published 2 articles. The second is more enlightening. Search query might possibly help folks get around paywall.
FT classifies the proposed ETF as “risk parity”. In theory these types of funds should remain stable in various market environments. But watching them in ‘22 that wasn’t always the case. Some held up well. Some suffered steep losses. They are hard to analyze - can appear very similar on paper. Best of the lot IMHO is PRPFX. Held it for couple decades but sold it several months ago to lock in a 28% YTD return. That’s way beyond what I believe it can produce / average longer term.
I’d be inclined to give the new Bridgwater fund a spot in my diversified portfolio, but do not currently have an opening for it. There’s been a lot of good and bad said about Ray Dalio. Suspect both sides are correct in their appraisals.
This one definitely on my watch list. M* showing 2.25% yield?? Leverage is a little confusing tho. Drawdowns will be interesting. This ETF should have some back testing data. Not a new concept.
I added a small position of ALLW to our portfolio. This ETF is similar to Dalio's hedge fund that he's been managing for several decades that has a very good track record, especially on a risk-adjusted basis.
Barron's recently published an article written by @lewisbraham regarding SPDR Bridgewater All Weather ETf. Here's a snippet: "Bridgewater has designed each separate asset-class weighting to perform well in at least one of four different economic environments—rising economic growth, falling growth, rising inflation, and falling inflation. Equities and commodities do well in a rising economic growth environment, while bonds and gold do well in a recession. Inflation-linked bonds, gold, and commodities do well in a rising inflation environment, while equities and traditional bonds do well in a falling one. By equalizing the risk exposure between asset classes, the ETF is designed to be resilient in all four environments."
To equalize risk from different investments, one can reduce the exposure to the higher risk investment, increase the exposure to the lower risk investment, or a combination of the two. The ETF doesn't take the first approach, preferring to use leverage rather than reduce expected returns.
From its FAQ:
ALLW uses leverage to put different assets on a ‘level playing field’ of risk. For instance, over time, nominal bonds will be less volatile than equities, and because of this they will also offer lower returns. But with the prudent use of leverage, nominal bonds can be brought to a similar risk level as equities, and therefore a similar level of expected return. This allows the assets to provide balance against each other, without sacrificing expected returns.
Per the MSN article that @observant1 had linked earlier (my bold added):
"As of March 31, Bridgewater All Weather held 76% of its assets in U.S. and foreign government bonds, 42% in stocks, 39% in commodities, and 30% in inflation-linked Treasuries—a leveraged 187% exposure.
Yet from April 2 through April 8, when the Vanguard Balanced Index lost 8% during the tariff slide, the ETF also lost 8%, proving no more volatile than the unleveraged 60/40 fund—if not exactly “all weather” either."
Lots of new ETF products are hitting the market these days. Dalio's name carries some marketing weight, so decent volume should be there for ALLW.
Pg 2: "...The Fund may obtain exposure to equity and fixed securities either directly or indirectly through derivative instruments (primarily futures contracts, forwards, currency forwards, swaps and total return swaps) and through exchange traded products (“ETPs”). The Fund's investments in derivatives will create leverage, which may be substantial and may magnify the effect of any increase or decrease in the value of the Fund's portfolio holdings... ...The model portfolio typically targets an annualized volatility level for the portfolio ranging between 10%-12%..."
Pg 10: "...Borrowing Money. The Fund may borrow money from a bank as permitted by the Investment Company Act of 1940, as amended (“1940 Act”), or other governing statute, by the rules thereunder, or by the U.S. Securities and Exchange Commission (“SEC”) or other regulatory agency with authority over the Fund, but only for temporary or emergency purposes. The 1940 Act presently allows the Fund to borrow from any bank (including pledging, mortgaging or hypothecating assets) in an amount up to 33 1/3% of its total assets (not including temporary borrowings not in excess of 5% of its total assets)..."
The fund is simultaneously deleveraging by keeping 38.92% (of assets, not total exposure) in cash. That is, had the fund assets been fully deployed, the exposures to the various markets (bonds, stocks, etc.) would have been multiplied by 1/0.3892, and the fund volatility increased by the same factor.
Comments
1) Domestic and international equities
2) Nominal and inflation-protected bonds
3) Commodities directly and/or through the use of derivatives.
It appears to be leveraged.
First thing I did when I saw your post was to visit their website, to check out how the fund has deployed capital..
their website shows 181% allocated (?) I don't see any mention of how exactly they are managing that feat. Are they shorting cash? I've no idea. The website doesn't seem to say... Whoever set up their website should have that easily identifiable. I see too, its showing its price at a 0.45% premium as of 3/6 === which is not the last trading day. So its 'stale' info. An ETF's calling card is its webpage. This webpage seems to be a 'work inprogress.
The ER is 0.85% It looks like their big stock, bond holdings are other SPDR ETFs.. which are ETFs any DIY'er can buy themselves without paying ALLW for the 0.85% management.
Their fact sheet lays out the investment framework, which includes equities, nominal bonds, TIPs, commodities, and gold -- all in different admixtures, depending on what growth and inflation are doing.. Whether ALLW adds value is dependent on how well they react at inflection points in capital markets.
Just my 'first take'. Maybe they will prove themselves over the ensuing months.
There’s not a lot of information out there yet. Much of what is out is highly promotional in tone. FT recently published 2 articles. The second is more enlightening. Search query might possibly help folks get around paywall.
Brave Search Results / 2 FT Articles
FT classifies the proposed ETF as “risk parity”. In theory these types of funds should remain stable in various market environments. But watching them in ‘22 that wasn’t always the case. Some held up well. Some suffered steep losses. They are hard to analyze - can appear very similar on paper. Best of the lot IMHO is PRPFX. Held it for couple decades but sold it several months ago to lock in a 28% YTD return. That’s way beyond what I believe it can produce / average longer term.
I’d be inclined to give the new Bridgwater fund a spot in my diversified portfolio, but do not currently have an opening for it. There’s been a lot of good and bad said about Ray Dalio. Suspect both sides are correct in their appraisals.
Here's a snippet:
"Bridgewater has designed each separate asset-class weighting to perform well
in at least one of four different economic environments—rising economic growth,
falling growth, rising inflation, and falling inflation.
Equities and commodities do well in a rising economic growth environment,
while bonds and gold do well in a recession.
Inflation-linked bonds, gold, and commodities do well in a rising inflation environment,
while equities and traditional bonds do well in a falling one.
By equalizing the risk exposure between asset classes,
the ETF is designed to be resilient in all four environments."
https://www.msn.com/en-us/money/savingandinvesting/bridgewater-s-new-all-weather-etf-will-its-hedge-fund-approach-work-in-this-market/ar-AA1G387R
I don't see any mention of how exactly they are managing that feat
The Key Info Sheet, Figure 2 says that the exposures are notional. Spend a little on options, get an outsized market exposure. What is Notional Value and How Does it Work?
To equalize risk from different investments, one can reduce the exposure to the higher risk investment, increase the exposure to the lower risk investment, or a combination of the two. The ETF doesn't take the first approach, preferring to use leverage rather than reduce expected returns.
From its FAQ:
"As of March 31, Bridgewater All Weather held 76% of its assets in U.S. and foreign government bonds, 42% in stocks, 39% in commodities, and 30% in inflation-linked Treasuries—a leveraged 187% exposure.
Yet from April 2 through April 8, when the Vanguard Balanced Index lost 8% during the tariff slide, the ETF also lost 8%, proving no more volatile than the unleveraged 60/40 fund—if not exactly “all weather” either."
Lots of new ETF products are hitting the market these days. Dalio's name carries some marketing weight, so decent volume should be there for ALLW.
Summary Prospectus https://www.sec.gov/Archives/edgar/data/1516212/000119312525045861/d872457d497k.htm
Prospectus https://www.sec.gov/ix?doc=/Archives/edgar/data/1516212/000119312525045857/d921460d485bpos.htm
Prospectus is LONG because it's followed by SAI.
Pg 2:
"...The Fund may obtain exposure to equity and fixed securities either directly or indirectly through derivative instruments (primarily futures contracts, forwards, currency forwards, swaps and total return swaps) and through exchange traded products (“ETPs”). The Fund's investments in derivatives will create leverage, which may be substantial and may magnify the effect of any increase or decrease in the value of the Fund's portfolio holdings...
...The model portfolio typically targets an annualized volatility level for the portfolio ranging between 10%-12%..."
Pg 10: "...Borrowing Money. The Fund may borrow money from a bank as permitted by the Investment Company Act of 1940, as amended (“1940 Act”), or other governing statute, by the rules thereunder, or by the U.S. Securities and Exchange Commission (“SEC”) or other regulatory agency with authority over the Fund, but only for temporary or emergency purposes. The 1940 Act presently allows the Fund to borrow from any bank (including pledging, mortgaging or hypothecating assets) in an amount up to 33 1/3% of its total assets (not including temporary borrowings not in excess of 5% of its total assets)..."
Cash is used to temper the volatility.
https://www.lazyportfolioetf.com/allocation/ray-dalio-all-weather/