(Bloomberg) -- As the economic cycle in the U.S. and Europe nears its late stage, investors should consider “taking a turn to the East,” according to Bob Prince, who helps oversee the world's biggest hedge fund at Bridgewater Associates.
In a year, the economy of an emerging Asian bloc will expand by the size of the entire Mexican economy, Prince, the co-chief investment officer of Westport, Connecticut-based Bridgewater, said Wednesday at the C4K Investors Conference in Toronto. In five years, it'll grow by the size of the Japanese economy, and in 10 years, by the size of the European economy, Prince said.
“As an investor you're buying and selling cash flows,” he said. “That's a lot of cash flows,” said Prince, who described the bloc as China plus about eight countries that are beneficiaries of outsourced labor from Chinese companies.
Bridgewater, which oversees about $160 billion, registered its first private securities fund in China on Oct. 17. The fund will employ a so-called all-weather strategy, or one that seeks to perform reasonably well during both favorable and unfavorable economic and market conditions.
Recent market turmoil in the U.S. has been triggered by the belief that economic growth and corporate earnings are peaking as interest rates rise and the boost from tax cuts fades, Prince said in an interview with the Financial Times published last week. The U.S. economy is at an inflection point and moving toward mediocrity, he told the newspaper.
Bridgewater's billionaire founder Ray Dalio is among several market watchers predicting an economic downturn in about two years. He told Bloomberg Television in an interview last month that the impact of President Donald Trump's tax cuts will begin to wane in about a year and a half, simultaneous to rising interest rates and costs from pension and health-care obligations mounting pressure on the budget.
To contact the reporter on this story: Katia Porzecanski in New York at kporzecansk1@bloomberg.net
To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Josh Friedman, Dan Reichl
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