Bridgewater Associates Launches AI-Driven Hedge Fund Strategy with $2bn Capital

Bridgewater Associates, the prominent hedge fund led by CEO Nir Bar Dea, has unveiled a ground-breaking new investment strategy that relies heavily on machine learning to inform its decision-making processes, as reported by Bloomberg.

According to sources familiar with the development, the strategy launched this week with an initial capital infusion of nearly $2bn, sourced from more than six clients. This new approach is part of Bridgewater’s larger Artificial Investment Associate Labs (AIA) initiative, which is overseen by Co-Chief Investment Officer Greg Jensen. The strategy combines proprietary technology, developed over a decade, with advanced models from leading AI companies such as OpenAI, Anthropic, and Perplexity.

Bridgewater has been piloting this strategy with a small portion of its flagship Pure Alpha fund, investing roughly $100m since late last year. Pure Alpha, which has recently posted a 14.4% gain in H1 2024, has faced years of inconsistent returns, including a 7.6% loss in 2023.

Jensen, who has been exploring the influence of machine learning in investing since 2012, believes that the new machine intelligence-powered strategy will significantly enhance alpha generation. While AI models will drive investment decisions, human oversight will remain integral, particularly in risk management, data acquisition, and trade execution. This balance is seen as crucial for maintaining a well-rounded, efficient investment process.