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Did Bridgewater cause the ETF crash?

By NexChange
Hedge Funds

gummy bear market chart

Ever wondered what caused the August ETF flash crash? Well, Zero Hedge may have your answer.

Bridgewater Associates – without a doubt the world’s largest hedge fund house – has recently filed its 13-F and according to the ever-indignant news portal, Ray Dalio and his motley crew of honesty junkies may have been the root of that whole, sordid mess:

“Bridgewater sold 41% of its holdings in the world's two largest EM ETFs in the third quarter amid a rout in developing-nation assets.  Specifically, it cut its investments in Vanguard Group Inc. and BlackRock Inc.’s ETFs to a combined 104 million shares, from 175 million in the previous three-month period.

The value of the ETF holdings dropped more than 50 percent to $3.4 billion as a result of share price declines and the divestments.

In other words, if anyone is looking for the culprits behind the aggressive ETFlash Crash of August 24, Bridgewater may indeed be a good starting point.”

Whether or not this is true is totally up to speculation, though it is worth noting that Bridgewater’s All Weather Fund was among the first things analysts and fund managers blamed for late August’s startling volatility, and given the fund’s parameters – not to mention size – it doesn’t seem implausible for it to have moved the markets even just the tiniest bit.

Photo: ☰☵ Michele M. F.

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