The below email was sent to Bridgewater employees and clients on March 1st, 2023.
Team –
Following up to let you know that the Executive Committee has solidified our go-forward strategy and we will begin rolling it out over the next week.
The headlines are:
- We are proactively restricting access to Pure Alpha, setting it up to overdeliver via a higher expected ratio. Our nearly 3-year track record (since mid-2020 when we established the Investment Committee) has demonstrated our ability to perform at full size. We want to raise the probability of sustained outperformance and focus on delivering a more exceptional product to our clients in our core business.
- We are doing this coming out of a period of good alpha performance and strong profit, which enables us to create a platform to constantly invest in building new businesses with the highest strategic value to our clients. We are leveraging our strengths and diversifying — specifically, we have assigned members of our leadership team to work on plans for commercializing our edge in compounded understanding via AI and machine learning, growing our Asia footprint via further expansion in Singapore, and materially deepening our solutions in sustainability and long-only equities. Over time, we expect this platform to produce the next round of growth in the business.
These are big choices with real implications. To pursue this path, going on offense while also managing constraints (consistent with proactively restricting access to Pure Alpha and investing in these new businesses), requires us to cut costs, free up resources, and restructure. This means changes to design and people, with material cuts in some areas. We will aim to implement them quickly, within the next week. I also recognize people have different levels of threshold understanding on strategy — we will go through more of the specifics live over that same time period.
This restructuring of Bridgewater to align with our strategic direction is the 3rd leg in an arc that began with the transition of investment governance to our Investment Committee in mid-2020 (since then Pure Alpha has produced a 10% net annualized return and hit expectations last year while stocks and bonds were down), and it continued with the transition of overall governance 5 months ago to the Operating Board of Directors. These transitions unlocked our ability to make the kind of change we’re now moving forward with. As a part of this leg and as we have communicated before, Mark Bertolini will return to the board as an outside director. I am deeply appreciative of his partnership over the last year, and grateful we’ll continue to benefit from his contributions.
Our reality now is that we are simultaneously in an exciting time given the opportunities ahead, and a painful one as we need to part ways with great teammates who have been on the journey with us. While recognizing it will create more questions for some, I am sharing this with you now because that’s how we’ve agreed to be, and I always want you to hear from me first. Department townhall invites or other communications from your managers coming your way soon.
Nir