Animal Spirits Podcast - Talk Your Book: Investing in the All Weather Strategy

Episode Date: September 29, 2025

On this episode of Animal Spirits: Talk Your Book, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ben Carlson⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ are joined by Matt Bartolini from State Street Investment Management and Chris Ward from Bridgewater Associates to discuss: the SPDR Bridgewater All Weather ETF, the strategy's origins, how it works, the fees involved and much more. Find complete show notes on our blogs... Ben Carlson’s ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠A Wealth of Common Sense⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Michael Batnick’s ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Irrelevant Investor⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Feel free to shoot us an email at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[e-mail]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ with any feedback, questions, recommendations, or ideas for future topics of conversation. Check out the latest in financial blogger fashion at The Compound shop: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://idontshop.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. See our disclosures here: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/podcast-youtube-disclosures/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ The Compound Media, Incorporated, an affiliate of ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ritholtz Wealth Management⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/advertising-disclaimers⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits Talk Your book is brought to you by State Street Investment Management. Go to state street.com slash all-weather to learn more about the spider, Bridgewater, all-weather, ETF, ticker A-L-L-L-W.W, that's all-W, state street.com slash all weather to learn more. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are solely their own opinion, and do not reflect the opinion of Ridholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast.

Welcome to Animal Sproats with Michael and Ben. The ETF rapper, one of the best financial inventions ever. That might be a stretch, but maybe not. I mean, of the last 50 to 70 years, I think you'd have to say almost definitely. Yeah. Well, the all-weather approach, which Ray Dalio invented, along with this team in 1996, has now made it to the world of ETFs. And the demand is obviously strong. They launched this earlier in the year.

And as of Monday, September 15th, it's already got almost $400 million in assets, which is pretty remarkable. What a launch. It's not like Bitcoin or anything, but like, Given that it's a relatively boring by design strategy, holy cow. Yeah, it's a diversified portfolio. I'm guessing the brand recognition, not only in Bridgewater, but all weather itself, probably has a lot to do with this, right?

The all weather thing, I remember, I think I looked, they released the white paper in 2012. And I read it right when it came out. And it's, I don't know, it's a pretty long paper. Not to brag, I read the whole thing, but by myself, no chat GPT back then. And I still remember that. I'm going to guess you skimmed. No offense. No, I still remember the whole framework of it. And it is, I mean, the whole idea behind it is, is interesting. And it's one of those things where I think there's some very extreme opinions on it. Some people like can't stand the idea of using leverage and levering up bonds. And some people like, no, this makes sense because you're putting things on an equal playing field in terms of their volatility and you're utilizing leverage in an intelligent way. And I just think it's a really interesting way to look at portfolio management.

So we talked to Matt Bartolini. He's been on the show a bunch of times from State Street Investment Management. We also had Chris Wardon, who's a portfolio manager at Bridgewater Associates, and also the lead architect and portfolio manager for the ETF. So it's the Spider, Bridgewater, All Weather, ETF, ticker, ALW. How do you, what would you say it? All W. See, because you're so good at these things.

So all W. All W. So here's our talk with Matt and Chris. Chris, first question is for you. So Bridgewater Association. It's all-weather strategy has been around for a while, decades, in fact, and got its start in the institutional world. And now you are bringing the all-weather model to the ETF market.

Talk about the evolution of where the strategy came from, what is it designed to accomplish, and why the ETF wrapper now is the right choice. Yeah. So first of all, thank you for having us today. We've been excited about this for a long time. And I do love starting with the story of all weather, because it's a pretty much. provides great grounding for what the strategy represents and what its goals are. So over 30 years ago, our founder Ray Dalio and the Bridgewater team, we're studying the question of,

is it possible to build a portfolio that can perform well in any type of economic environment? One that has similar long-term returns as equities, but without that boom-bust return profile that you have to take. And all-weather was our best answer to that question. And I know it hasn't happened for a while, but believe it or not, stocks can go down and stay down and remain down for a long period of time, right? longer than what we've experienced recently, but it does happen, and it's not just equities. The same is true for bonds, for real assets, and any asset. But when stocks go down and stay down, it's not random. It's because you can go through extended periods of time where the fundamentals are really bad for equities,

and those fundamentals can be really good for other assets. And so that's what's all weather is trying to capitalize on. That insight, in the 90s, we discovered that if you hold a risk-balance mix of assets that do well at different times reliably, different types of economic weather, you can really minimize your vulnerability to losing money due to adverse shifts in the economies, and that if you do this with thoughtful, capital-efficient portfolio engineering, you can be more diversified and still seek to achieve the types of equity-like returns over the long run that most investors are chasing. You don't have to choose between diversification and returns. Diversification doesn't need to feel like

eating your broccoli. All-weather tries to create both. And so that's what we built. All-weather's our optimal approach to long-term strategic asset allocation. It's the best way we know how to collect risk premiums from the market in a way we think is going to be more resilient and more consistent than traditional approaches. Now in 2025, we're thrilled in partnership with State Street to be bringing the approach to the widest possible audience in an ETF format. It's really a great fit for the rapper in our opinion, and so we're excited to do it. So I read the white paper, I don't know, it must have been 12 or 15 years ago about the all-weather, and it had the matrix in it. And that's the thing that stuck out in mind ever since I, every time you hear about

the strategy. And it was kind of like growth and inflation on one piece and then rising or falling on the other, and it just showed which types of asset classes do well under which scenarios, rising or falling inflation, rising or falling growth. And it's kind of trying to hit each of those boxes. And obviously, that's the whole point of the all-weather. But I thought maybe you could just kind of explain, you know, which asset classes perform well or unwell in specific environments and how this strategy seeks to pull that all-weather nature out of the fund. Yeah. So I think you're referring to the four bucks framework. We've been sort of publishing that visual basically since we launched the strategy. And so in terms of what assets perform well

and differently at different times, I think I want to start by just giving some grounding for why we choose growth and inflation to begin with, right? So logically and from our study of history, we think growth and inflation changes is the best way to categorize different markets in terms of how to diversify herself. And the reason we do this is because all assets implicitly discount a future scenario, right? Sometimes it's easy to see. Like bonds, it's just the four path of rates. Sometimes it's more imputed, like estimating implied earnings growth for stocks, and then what causes those prices to move and tend to lead to good or bad returns. So either actual conditions are different than expected or the expectations change. And usually it's a mix

of both, right? And this should sound pretty familiar. Just think about earnings season. Right, a company misses on targets, the stock goes down. That's conditions being different than what was expected. Or a company could issue a much more optimistic forecast, right? The stock goes up. That's a change in expectations. So at the micro level, it's all about the individual company results, but at the macro level, we think that growth and inflation are the key drivers. And the reason for that is growth is really changing the volume of cash flows produced by an economy. Inflation is changing their price now and through time. And because every asset class is just a different style of claim on those cash flows, changes in growth and inflation impact them differently.

So some assets like government bonds typically do well when growth disappoints and inflation's falling. Some assets like commodities typically do well when growth is hot and inflation's rising, right? There's that complementary relationship there, two assets with complementary offsetting relationships to changes in growth and inflation. And so identifying and exploiting these relationships is really the foundational idea behind all weather. Going back to that four box framework, this is how we build the portfolio. Once you understand these relationships, you can use that as your building block. And so we put 25% of the risk in the portfolio in assets that do well when growth is better than expected, which in this portfolio, all W is equities and commodities

ex-gold. We put 25% of the risk, not capital, and assets that do well at the opposite time when growth is worse and expected. And for us in this portfolio, it's nominal bonds, inflation-linked bonds, and gold. And then we do the same thing for inflation, 25% in rising inflation assets, commodities, gold and tips, and then 25% of the risk in falling inflation assets, which is for us nominal government bonds and equities. And the idea is that if you get the mix right. You're in theory creating a portfolio that has no vulnerability to adverse shifts in growth and inflation. Some assets might go down when others go up, but we try to be balanced on both sides as we collect that risk premium you get for being an investor. You mentioned that

the strategy marks its inception back to 1996. There's global warming hasn't just impacted the economy. It's also impacted the market. And things change. Markets evolve, strategies evolve, people evolve. Is there anything different about how asset classes react to the various buckets that's made you either reconsider or evolve your framework over time? Because the market really does look a lot different than it did in the past for a myriad of different structural reasons. Obviously, there's some cyclical reasons, some temporary reasons. But what's your thoughts in how markets evolve over time and how that impacts your strategy? We think that a lot of these core ideas are pretty timeless, right? And that's not to say that the

strategy doesn't evolve. We don't have new learnings and we don't integrate those learnings in the portfolio. But, you know, at the end of the day, we think something like a government bond, right? A fixed claim on cash flows has a pretty timeless relationship to that looks better when growth is worse and those cash flows are more scarce and it's more valuable. And it's pretty timeless that that claim on fixed cash flows is going to look worse when growth is booming, right? And there's lots of more cash flows being produced in the economy. And so you don't necessarily care about that fixed claim as much. And you can make the same argument for inflation.

Now, it's not to say that you can't go through sort of unique periods of time where some of those timeless relationships do come into question. And I think a decent example of a time period like that comes with government bonds, right? And so if you look at government bonds, when Treasury bonds are 5%, if we were to go through a big recession,

I feel pretty good about their ability to deliver useful, meaningful returns for us if we go through a drawdown. If Treasury bonds are 0%, I feel much less good about that. And so we do have game plans for these types of decisions that are informed by managing the strategy through a lot of unusual times in the past 30-so years, including managing it through the financial crisis, through COVID, through extreme low rates. And you can think of the rules that we're running in our process is basically saying, you know, what assets do we want to hire to perform this specific job? We don't have a fixed target to something like government bonds. We don't have a fixed target to something like tips.

We're running our rules to decide are the assets that I have at my disposal to access return. and the environments when I need it, the right ones to hold. And we will make those sort of strategic changes over time to the portfolio if we think it'll better position us to sort of get the protection in the times that we need it. But no, we don't think that there's been a sort of wholesale change in how assets fundamentally relate to the economy. It's more like you just need to adapt and adjust to when you do face some unusual circumstances out there. So, Matt, I'm curious how you and your team at State Street have decided to take the Bridgewater approach and map it on into an ETF framework because Chris Menend,

mentioned that the portfolio is not equal-weighted, it's weighted by, you know, the risks, so the volatility, I guess. So how do you take that framework and turn it into a usable strategy? Yeah, I mean, from an ETF perspective, you know, working with Bridgewater as the sub-advisor in building the portfolio using instruments that we have at their disposal to create that balanced portfolio across those different economic environments. It really just takes a look at it of how to create this portfolio, but also with the taxable investor in mind. And I think some of the choices that are being utilized within the portfolio are hitting right at that.

So, for instance, individual single commodity futures, those are largely a tax inefficient asset class for an end taxable investor because of the production of, you know, K1 associated with that. As a result, to obtain that commodity exposure, a total return swap held within a Cayman trust, like these are very operational components to it are utilized to get that exposure to, you know, rising growth, rising inflation asset like commodities, but do so with a logical choice for that taxable investor to not have such adverse tax consequences. And those type of choices are continuing occurring throughout the portfolio,

even within, you know, again, that rising growth bucket, you know, owning something like emerging market credit spreads would be one way to potentially, hit at some rising growth bias. However, for that taxable investor, the way to achieve that would be to either own a emerging market bond and then hedge that out with futures. And for the taxable investor, that is largely not the greatest of outcomes. So making those relative value choices within the portfolio for the taxable investor relative to the say the non-taxable. I think those are some of the choices that, you know, Chris and the team of Bridgewater made and that are being implemented within the portfolio as well. Chris, is this a substitute for the 6040 portfolio or

is it a complement? And if so, where do you think it fits into either a client or an advisor client portfolio? Yeah, I wouldn't call it a substitute. You know, if you kind of step through the design and the thinking behind all weather, it is sort of crafted as an alternative to the 6040, but we know that's not how most people have invested in the strategy over the years have used it. And so they've really used it as something to sort of fit in alongside as another source of good good efficient returns that is at least different. It's different than just being as relying on the equity beta. And, you know, they can fund it in a flexible way depending on, you know, which goals are trying to achieve. We do think that, you know, you know, maybe in the 2010s, a lot of

clients turn to all weather as their bond replacement, right? When yields were so low and clients had larger return targets and, you know, they couldn't sort of stomach the idea of just sitting that and writing that out and a 2% yielding government bond, they would go to all weather as a source of return, but also still a diversifier in the portfolio. And then I think, Today, we're seeing probably more clients moving towards all weather from stocks, right? Some anxiety about the pricing in the U.S. and the concentration in the U.S. with a lot of the dynamics going on in the world. And so all weather is a place where they can go try to, you know, get that incremental diversification

without really sacrificing much on long-term returns. We've also seen clients use it as sort of a kind of gateway into alternatives, right? You know, clients who are less familiar with alternative structures, alternative approaches, alternative instruments, they've moved to all weather as a sort of way to dip their toe in the water before perhaps going further into that space. I mean, I think at the end of the day, like the reason I'm so excited about all W in this channel is that it's just, it's really a one-stop shop line item that can help investors plug a lot of gaps in their portfolio.

You hear a lot of things in the news today about is international back or, you know, should we worry about U.S. exceptionalism or what about inflation and real assets and all these things? If you go to all weather, you've got a capital efficient single line item that packs a lot of diversifying assets in there that I think can really help investors improve their portfolio resiliency while letting us handle a lot of the work. So the one big pushback I've seen on all weather over the years is the fact that you're essentially levering up the bond portion, right? Because bonds are much less volatile than stocks.

If you want to get the volatility to an equal weighting, you have to get the bond piece up somehow either by over-allocating to bonds or by using leverage. I'm curious if this strategy employees leverage in some way or in what you think about that critique. Yeah, I think leverage and using capital efficiency like that is pretty commonly misunderstood in the marketplace. And so just to hit the headline first, all W is capital efficient. If you invest a dollar in the ETF, you are getting about $1.80 of exposure to assets. That's going to change and move around over time. But it is trying to do that where it's trying to make sure that when you own bonds, bonds are there to give you real returns when you need it, not just dampen your losses by not being stocks.

And so I think one way to think about how we think about using capital efficiency in portfolios is I think, again, I made the point earlier about diversifications and feel like eating your broccoli, right? Because when investors in a world where maybe you have $100 of stocks and you think, okay, I'm going to take $5 and I'm going to move that into bonds, right? You made yourself more diversified, right? But you also probably lowered your expected return in the portfolio. And so Bridgewater's approach is more like, why not move $5 of stocks into $10 of bonds, right? you're probably getting more diversified because those bonds are actually carrying their weight more in the times that you need them. And you're really not sacrificing unexpected return when you do that so long as you're keeping the risks consistent. And I think that, you know, the bond thing

sort of gnaws at some people particularly because the question they love to ask is like, what do you do when stock and bond correlations go to one, right? If stocks and bonds go to one, are you going to be in trouble because you're using this capital efficiency? And I'd say, First of all, like why they go to one matters, and there's a big why, which is something we've prepared for, which is stocks and bonds have very similar relationships to inflation, right? Stocks and bonds, we expect to be very diversifying to one another when growth is driving markets. And that's what we've seen really for the last 30 plus years and that's strong negative correlation. But if you go to history well before 1980, you actually saw positive correlation between stocks and bonds because they have the same kind of fundamental exposure to inflation. And so that's why we have real assets in the portfolio, too.

It's not just... So, 2020 is the nightmare scenario, obviously. Yeah. 2022 is a difficult year for approaches like this. And look, I think that all weather is not a silver bullet, right? There's two types of periods where stocks and bond correlations can move together. One is when inflation volatility is driving markets, right? And another is when you encounter one of those sort of short-lived periods where cash is king

and all assets underperform. It could be a large tightening like it was in 2022. It could be in a spike in risk aversion. And when all assets sell off and there's nowhere to hide, we'd expect. expect all W to lose money as well. Like, we know this. It happens from time to time. And importantly, we think you're compensated for that risk.

We think that's the risk you all take as investors. And we think that these cash as king periods tend to be short because policymakers have huge incentives to not let this go on for too long. Because in a capitalist system, prolonged periods where cash is king and all assets are selling off causes real problems for capital formations and has consequences in the real economy. On the other hand, you can get meaningful adverse shifts to growth and inflation that are sticky and durable and create lost decades for an individual concentrated asset class position.

It's why it's so easy to see this through time, whether it's the last decade for bonds, the 2000s for stocks, or the 1970s for bonds and stocks. You can go on and on. So I think that, yes, we are taking a little bit of that correlation, go to one risk by holding larger than 100% allocation to gross assets, but we just think that that risk in the grand scheme of things tends to be shorter lived, and in many ways is less of a sort of longer term wealth compounding problem than any sort of directional bet on growth and inflation you implicitly get in a concentrated portfolio.

Also another thing, like in real time, right? So after all W was launched, you had Liberation Day, and that was a period where you saw risk premiums widen across the globe. And in that type of period where risk premiums are widening, you know, all assets share those premiums. And they started to see, you know, risk assets, stocks and bonds fall. And we saw long-term treasuries really fall right after that. And then you had, you know, as Chris was referring to, like Paul.

policymakers have somewhat of an incentive to, you know, to blunt some of the volatility that they perhaps even created. And all of a sudden, we then had that post-liberation day rally and you saw, you know, the cash as king trade that was only in, you know, fruition for maybe like two to three days, all of a sudden, revert and risk premiums, you know, started to compress, right? So I think that's a real tangible example, even just in all W's, you know, brief history as well as an ETF. So how did all weather perform during that short period of time? Yeah, so in looking at it, right? So it shares risk as in holding all assets, right? And it fell, right? It was not impervious to the impact of risk premiums widening, but it fell less than stocks, fell more than bonds, right? So, and that's what you sort of think, think about if it's going to have equity-like returns with more stability. Again, that's a very brief time period, but it was able to rally back right off of that and sort of act as that diversifier from a full portfolio perspective. So, Matt, you mentioned how you get the commodity piece. Is it similar in how you get the leverage for the rest of the portfolio?

Like, how are you getting the $1.80 for a dollar worth of invested? How are you guys actually doing that? Like, what instruments are you using? Yes, I mean, that's probably a better question for Chris to weigh in. I mean, there's a lot of different type of vehicles that are being utilized, ETFs and futures. Obviously, the ETF won't give you the leverage, but some of the future as well. So I know, Chris, if you want to walk through some of that. Yeah, outside of the commodities, the overwhelming majority of futures, the overwhelming majority of the leverage comes through plain vanilla futures, mainly for the government bond portion of the portfolio, we are using a small amount of futures for our equity positions as well.

For better, for worse, investors do think about strategies as a relative thing. They compare it to what they could have gotten. And let's just say that at this point in time, the comparison is the S&P 500. It's been the best performing asset class for most investors, assuming that, you know, outside of cryptones and things like that. So is there a type of environment in which somebody would look over and not just like a liberation day, you know, 20 day type of return, but like a three to five year period? What would make them feel really good about having chosen? Would it be U.S. stocks chill out? Would it be like U.S. stocks are in a bare market? What would be the trigger point

where they say, wow, I'm glad I did this? Yeah. So, you know, one of the hallmarks of all weather for us is we think it's consistency, right? That if you do have a Goldilocks environment where stocks are doing better than everything else, right, we think it's more likely than not that all weather does fine, right? But there's a decent chance that's going to underperform stocks. And for us, like, that's okay. And the reason why it's okay is that you can have a lot of other, you know, types of decades, or if you take a decade like maybe the 2000s, which was really a sort of disappointing period for equities, but not necessarily disappointing for all asset classes, something that's balanced and diversified, like all W, can also do very OK.

We think that if you have a shift towards a more stagnationary impulse in market, it's not meaning going back to the 1970s here, but just a shift where like, you know, that tradeoff between growth and inflation is, you know, sticky and problematic for a long time that you can have enough assets in all weather that help to deliver, you know, good, solid, average, positive returns for you over time, right, when equities are starting to suffer. And so look, like we're, we're not, we're not naive, right? when you have a period like we've had recently with U.S. equities being the best asset for as long as it has, we know that virtually any move towards being more resilient has come at a cost. We know that, right?

And we've definitely had clients ask us if we think this still makes sense. And we do. We do. Investing is not about looking in the rear view mirror. It's about looking ahead for what comes next. And I think the question before us all is, should you count on the exceptional performance of equities repeating itself? And is your portfolio prepared for the possibility that it does not? And so, yeah, like 15 years feels like a long time for equities to this beyond this epic run, but it's a pretty extraordinary run. A lot of the fundamentals that produced that run are probably, you know, either sort of shifting to being more like neutral or becoming more like headwinds today. And we think a lot of investors are simply underprepared for that possibility. Every strategy has some active components in it because you have

to make decisions at some point. But is this, is this just more of a rules based follow the rules type of framework or are there, is there tinkering going on behind the scenes as well? Yeah, I describe the active management here as being strategic, not tactical. And it's related to a little bit about what I said earlier, right? Like, so if we develop new insights about how to, how to balance growth and inflation better, we'll integrate it. If there's important changes in liquidity, tax rules, market structure, will integrate it. But we're always going to target being balanced. We're always going to have the risk budget be the thing I described to you earlier, those four boxes, 25% of the risk and assets that do well in each types of environments, right? But balance

doesn't mean static, because like I said, conditions and pricing can evolve that might change the effectiveness of certain assets to achieve their goal. And so that's, that's, that's That's where we are sort of, I wouldn't call it necessarily tinkering, right? Those can be important strategic shifts, but they're strategic shifts. They're not tactical shifts. We're not here expressing relative value views on U.S. versus European equities or anything like that. And I want to be crystal clear about that because Bridgewater is very well known for this and some of the other strategies that we run in private funds.

But that's not not in all weather. We're strategic adjustments over time, but we're not trying to generate alpha by timing markets. So you're waiting the allocations of, all the underlying asset classes by, is it by, like, expected volatility or realized, or how does that exactly work? Yeah, it's, I mean, I would say expected. It's informed a little bit by realized, but we size our exposures in this fund in any of our all-weather strategies as like very, very long-term slow moving, right?

So we target in the portfolio. I mentioned the capital efficiency, the 180% gross exposure earlier. We're targeting something that we think will translate to about a 12% ex ante volatility at the portfolio level, right, which we think translates to a return that's going to be comparable to stocks over time. And so that 12% is not a short-term fast-moving volatility target. For example, when we were managing this fund through the month of April, through the Liberation Day turmoil, we did not change our positions very much, and that's by design, right? We don't want, like, getting whipsawed by short-term wiggles and market volatility to create a bunch

of turnover, a bunch of realizations, and there's some sort of nasty payal profile. implications of sort of buying at the bottoms and levering up at the highs, if you are integrating too much information about short-term, realized volatility into the portfolio design, we're sizing it such that, you know, if you sort of held or followed this approach for maybe, you know, three, five, seven, ten years and he kind of looked at it through a full market cycle. What sort of kind of volatility profile do I think it would have? And our best guess for that would be about 12% expected, right? There's going to be some years where it's higher, some years where it's lower, but it's a long-term

structural, slow-moving type estimate. You mentioned one of the buckets has commodities X gold. What about like something like oil, for example? Like, does oil have positive expected returns and maybe also as a follow-up? Are you guys short? Is there any shorting in this fund? There's a long one. No, we're trying to be long assets.

We're trying to collect risk premiums and just do it in the most consistent, efficient way we can. And then so with respect to commodities, look, we think commodities are a really good way to, let's separate gold out for a second. if you just take the broad commodity complex, we think it's a really effective way to access pressures on short-term inflation, right? And we also think that, like, they're a pretty good response function for growth as well. You know, where commodities can get a little bit tricky is that any individual commodity can be pretty idiosyncratic, right? You could have sort of a bad

harvest or you could have a sort of, you know, a technological innovation in U.S. fracking or something like that, right? So the supply dynamics for individual commodities matter a lot too, and it can sort of sometimes make it so that they might not follow that sort of logical, timeless overtime relationship to growth and inflation. And so the key thing there is really just to hold a broad basket of them to get exposure to the whole commodity complex and as diversified a way possible so that you aren't sort of overly sensitive to sort of anyone sort of, you know, anyone sort of supply issue that might come up along the way. Matt, as you know, investors are cost conscious and they'll often say things like, why would I do this when I could just do that? Obviously, there was

a lot going on inside of the strategy. There is a lot of benefit of things that an individual investor can't, or let's just say, should not do on their own. So what does that look like for AllW? If there's a DIY investor that's trying to replicate it, I think, you know, I think that type of process would be really, really, really hard. First and foremost, the benefit of AllW, or one of the benefits is tapping into the world-renowned macroeconomic research and expertise that Bridgewater can provide. And to really understand and map out the logical cost and the fact that asset classes may be having

two different reactions of growth and inflation. You know, Chris made that reference earlier. If there's a bond that has 0% yield, that reaction function to falling growth dynamics will be far different than the one that has a 5% yield. In making those choices in the moment and actually thinking about it strategically for what that could do for diversification

across those different economic environments, that's really hard to do. And that's why Bridgewater is with this fund and has, you know, pioneered that all-weather approach since the 90s. But I think even just taking that aside and looking at it, the exposures today, the ability to get that capital efficiency and to balance the risks that all assets share and to put them on an equal-level playing field and then have it spread in an equal quadrants across those four buckets. You really can't do that with ETFs. If this was a, you know, an ETF of ETFs, you can't do that. You have to use other instruments. And so mathematically, even just beyond the fundamental association with Bridgewater, mathematically

it's really hard for that DIY investor to even come close to achieving this type of overall exposure at a point in time of today, right? Which you can look, you can look at the underlying holdings and see what the fund is holding and what the positions and the weights are. But then to replicate that within your own portfolio using just the ETFs or some other securities, that's really hard and mathematically really hard, but also costly too, right? If you can have access to futures, there's costs associated with that, right? So I just think it would be really hard for that DIY investor to try to replicate what AllW is seeking to achieve

and really to tap into the expertise that Bridgewater can provide. One more question for me. Chris, I don't know how long you've been with Bridgewater before, but it's interesting to think about the fact that Bridgewater has typically worked with institutional clients, pensions and sovereign wealth funds and endowments and foundations. And now this type of strategy is being released in an ETF structure, you know, a tax-efficient structure to retail investors. Do you think this would have surprised a lot of people at Bridgewater five, 10, 15 years ago that this type of strategy could be rolled out to retail investors because I think it is pretty, I don't know, seemingly groundbreaking that retail investors not have access to strategies like this in this type of wrapper?

Yeah, it's a great question. So, you know, the short answers I've been here for 19 years. And I think that, you know, maybe some people would be surprised. But I think that we've always had this ambition of being able to do this with an all-weather type strategy at some point over time, right? And it was really just about cracking the code on how, right, and how we were going to do it. And so, look, there have been some regulatory changes over time that make it much easier for us to sort of implement a capital efficient design in the wrapper. And that has a lot to do with the sort of why now element of it. But a huge part of it was also finding the right partner, right?

We are set up not just to manage money for, but really to serve as clients like, you know, a relatively narrow client base, you know, for how well known our firm is and for how many assets we manage. The number of direct clients we have is actually relatively. few. And so to be able to link up with a partner like State Street that is really basically invented the ETF wrapper, right, has decades and decades of experience and sort of building and managing great ETFs and lots of the relationships around the world to go sort of get that placed with different clients and make sure they understand their investments. It was sort of a match made in heaven. We thought of it as like we finally found the organization where we can bring our macro understanding and our portfolio construction expertise and marry that up with their

expertise within the ETF space and finally do this inequality way that we think is going to positively impact a lot of savers around the world. And so it's something that we always thought would be possible. We never knew quite how to do it. And the excitement internally now that we're doing it is palpable. Matt, for people that want to learn more about accessing this all-weather strategy from Bridgewater in Via Via, through State Street Investment Management, where do we send them. So I would just, I would go to our website. So ssga.com would be the best place to go. We have a lot of great insights pages on that. There's a lot of new articles. We recently posted one about how you might want to include this within a 6040 framework alongside that. We have multitudes of articles

in white papers to talk about the strategy. And like I said, it's transparent. So you can see the holdings on a daily basis. It's funds holdings page is obviously on there as well. All right. Thanks, guys. Appreciate it. Okay. Thank you to Matt. Thank you to Chris. Remember, check out statestreet.com slash all-weather to learn more about the all-weather strategy, all-weather ETF, and email us, Animal Spirits, at the compound news.com. State Street Investment Management is the creator of the U.S. first and world's most liquid ETF. Source, Bloomberg Finance LP, as of July 31st, 2025. Bridgewater provides a daily model portfolio to SSGA Funds Management, Inc., SSGAFM,

based on their proprietary all-weather asset allocation approach. The model portfolio is specific to the fund, based on Bridgewater's investment recommendations, SSGAFM purchases and sell securities and or instruments for the fund. SSGAFM seeks to implement Bridgewater's investment recommendations, but may change the fund's investment allocation at any time. Important risk information, State Street Global Advisors, SSGA, is now State Street Investment Management. Please go to state street.com slash investment-management for more information.

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