The All Weather Strategy

Bridgewater

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Bridgewater explains the thinking behind the All Weather strategy and how balancing risk across different economic environments shaped its portfolio design. Rather than forecasting markets, the paper argues diversification across growth and inflation regimes can create a more resilient investment approach. It also traces the strategy’s origins from the 1971 Nixon shock through its 1996 launch.

Key Takeaways

Risk Balance Matters: The strategy allocates 25% of portfolio risk to each of four economic environments instead of concentrating risk in a single outcome.
History Shaped Design: Development spanned about 25 years, beginning after the 1971 Nixon shock before culminating in the All Weather strategy's 1996 launch.
Institutional Adoption Grew: One early pension client committed $200 million, while a later survey found 25% of institutional investors were using risk parity concepts.

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