The flagship fund at Bridgewater Associates is missing out on the rebound that some macro managers are enjoying this year.

The Pure Alpha fund at Ray Dalio’s firm has tumbled about 6% through Aug. 23. The losses were fueled by bearish wagers on global interest rates, according to a person familiar with the matter. The fund, which bets on macroeconomic trends, is trailing the 13% return for the MSCI World Index. A more levered version of the flagship fund, Pure Alpha II, was down about 9% in that time.

Pure Alpha’s performance is in contrast to many peers, which are recovering after struggling for several years. Macro funds have gained 4.7% this year through July as rising volatility and roiling political tensions have created trading opportunities. But fund managers who have been betting that bond yields would rise have been burned. Yields have sunk to levels not seen before.

Dalio, who runs the world’s largest hedge fund firm with $160 billion in assets, has lamented the rate environment for several months. In a LinkedIn post Wednesday, he said the global economy is in the late states of the long-term debt cycle and that central banks have few levers left to reverse an economic downturn.

“Interest rates get so low that lowering them enough to stimulate growth doesn’t work well,” he said.

In July, the billionaire recommended buying gold as a way to profit while central bank stimulus nears its limit. He said the stimulus will spur investors to seek other forms of money such as gold.

As you might know, I have a simple timeless and universal template for understanding and anticipating what is happening in the economy and markets.

— Ray Dalio (@RayDalio) August 28, 2019

At Bridgewater, other funds have also seen losses. The firm’s Pure Alpha Major Markets fund, which invests in a subset of the markets traded by the broader strategy, sunk 18% this year through Aug. 23, people said. It manages about $16 billion and since its 1991 inception has gained an annualized 12.5%.

A bright spot has been the firm’s risk-parity All Weather fund. It seeks protection from market turmoil by investing in a mix of stocks, bonds and currencies. The fund, which manages about half of the firm’s assets, jumped 12.5% so far this year, one person said. Another Bridgewater offering, the Optimal fund -- a combination of the All Weather and Pure Alpha strategies -- is up about 4% this year.

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