Investors' worries have multiplied in recent weeks as President Donald Trump's plan for tariffs on imports took shape -- and settled in a form that could weigh heavily on U.S. companies, consumers, and the economy. Trump announced the full plan last week, involving various levels of tariffs on imports from countries around the world. From a baseline tariff of 10% for most countries to levels (at this writing) reaching 54% and 32% for China and Taiwan, respectively, the duties were deeper than investors and analysts expected.
The concern is that these tariffs, paid by U.S. companies that import the raw materials or finished goods, will weigh on corporate profits. And that consumers, facing higher prices on everything from fruit to electronics, will have less to spend on discretionary items. On top of this, economic data has already shown some signs of weakness. For example, U.S. consumer confidence fell for a fourth month in March, and a measure of activity in the services industry slowed to its lowest since June 2024.
All this has prompted economists to say a recession is on the way. Many corporate leaders consider a recession to already have arrived, BlackRock chief Larry Fink said this week at an event in New York. In this context, a recently launched exchange-traded fund (ETF) from State Street Global Advisors, the asset management business of State Street Corp., in partnership with Bridgewater Associates, looks particularly timely as a way to help investors weather any potential storm.
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Finding a strong mix
First, a little background on Bridgewater and what's inspired the creation of this ETF. Ray Dalio founded Bridgewater Associates in 1975 and built it into an investment management empire. In 2023, it became the fourth most profitable hedge fund ever. The top investor is known for developing cutting-edge investment strategies covering everything from stocks to bonds and currencies. One of his most well-known strategies, and one that seems compelling during today's market turmoil, is the "All Weather" strategy.
The idea is to develop a portfolio that may perform well through any market environment. Dalio launched All Weather in 1996 at Bridgewater, and in early March, Bridgewater partnered with State Street Global Advisors to open up this type of strategy to a broader range of investors via the SPDR Bridgewater All Weather ETF (ALLW -0.08%), based on the principles of Dalio's All Weather strategy. Currently, Dalio "serves Bridgewater as a mentor to the CIOs and Investment Committee, a member of the Operating Board, and as a senior investor, which he plans to do for the rest of his life."
The All Weather strategy attributed to Dalio typically includes:
- 30% in stocks, for growth.
- 40% in long-term bonds, to offer safety during tough economic times.
- 7.5% in gold, to offer safety and serve as an inflation hedge.
- 7.5% in other commodities, to support performance during inflationary periods.
Research over the years showed that this combination of assets should result in sure and steady performance over time -- something investors may clearly look for today as recession fears mount.
Is this ETF right for you?
So, how can you get in on this ETF, and is it right for you?
ETFs trade daily on the market just like stocks, meaning you can buy them as you would a stock. One thing to keep in mind is that ETFs come with fees in the form of expense ratios. It's important to choose an ETF with an expense ratio of less than 1% to preserve your returns over time. The All Weather ETF fits the bill, with a ratio of 0.85%.
So, is this the right instrument for you? If you're a very aggressive investor, you may be most drawn to tech stocks or growth ETFs today, to benefit from the declines in valuations. But even if you favor those high-growth players, it could still be wise to add a few shares of this "safer" investment to your portfolio. If you're a cautious or middle-of-the-road investor, you might make the All Weather ETF one of your bigger buys today.
And in either case, plan on holding on well beyond any difficult times. Why? Both good and bad market times come and go over the years, making Ray Dalio's All Weather strategy a wise one to employ for the long haul, regardless of your investment style or current market conditions. Its mix of assets may offer your portfolio a key element to excel over the long run: resilience.
Editor's note: This article has been updated. The SPDR Bridgewater All Weather ETF is an ETF from State Street Global Advisors in partnership with Bridgewater Associates. Ray Dalio did not himself launch the ETF.
