Australia the first retail arena for Bridgewater

By Michael Bailey

THE ultimate ‘uptown’ funds manager, Connecticut’s Bridgewater Associates, has chosen Australia for its first foray into the retail market.

Two of Bridgewater’s absolute return funds have been made available to private clients of the funds management division at Bell Potter, whose stockbroking division has serviced the US manager in Australia since 1975.

Bridgewater uses long and short positions on global equities, bonds, commodities and currencies to get its uncorrelated returns, the latter asset class having proved most popular among Australian institutions.

Its entry into Australia’s retail market will be marginal at first. Only Bell Potter private clients with a spare $50,000 need apply for Bridgewater’s Global Pure Alpha or Global All Weather funds.

However, Bell Potter marketer Angus Carson said platform berths were being sought.

Both Bridgewater funds combine all of its strategies across the major asset classes, however, the Global Pure Alpha Fund does so more aggressively and adds what Carson calls “modest” leverage.

The Global Pure Alpha Fund has returned an annualised 15.2 per cent since 1989 net of fees, without which the return would have been 22.4 per cent. Carson says the difference is due to the fund’s performance fee structure, which in addition to a 2 per cent annual management fee takes 20 per cent of all returns above zero.

He admits this fee structure has “raised a few eyebrows” among Australian asset consultants and researchers, although he points out that absolute return funds with higher leverage or manage-the-manager structures are able to more easily hide fees.