Ray Dalio’s Bridgewater Associates LP, one of the world’s largest hedge funds, increased its exposure to the iShares MSCI Emerging Markets ETF (NYSEArca: EEM) during the third quarter while reducing its allocation to the SPDR S&P 500 ETF (NYSEArca: SPY).
Bridgewater added 4.5 million shares of EEM during the third quarter while paring its SPY stake by 1.84 million shares, reports Ken Kohn for Bloomberg. SPY is the world’s largest ETF while EEM is the second-largest emerging markets ETF by assets.
The largest emerging markets ETFs by assets, the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO), was Bridgewater’s largest equity position at the end of September. Bridgewater owned 110.8 million shares of VWO at the end of the third quarter.
EEM and VWO differ in that the former features exposure to South Korea while the latter does not. EEM tracks an MSCI index while VWO tracks a FTSE index. MSCI classifies South Korea, Asia’s fourth-largest economy as an emerging market while FTSE does not.
In addition to VWO, SPY and EEM, theiShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEArca: LQD) and the iShares Core S&P 500 ETF (NYSEArca: IVV) are the other ETF’s that were found among Bridgewater’s top holdings at the end of the third quarter.
Based on the market values of Bridgewater’s position in those ETFs, the firm accounts for a considerable portion of hedge fund ownership of ETFs. At the start of the third quarter, hedge funds owned nearly $37 billion worth of various ETFs, an amount that was up 12.1% from the start of the second quarter. [Hedge Funds Love These ETFs]
Recent research from Bank of America Merrill Lynch shows VWO and EEM are two of three most owned ETFs by hedge funds.
iShares MSCI Emerging Markets ETF
ETF Trends editorial team contributed to this article. Tom Lydon’s clients own shares of EEM, IVV, LQD and SPY.