‘Money continues to be trash’ — Billionaire Ray Dalio says retaining cash in a financial savings account isn’t protected. Right here’s what he holds as an alternative

Some say money is king. However in keeping with Ray Dalio, founding father of the world’s largest hedge fund Bridgewater Associates, it will not be smart to maintain an excessive amount of of your funding cash in money today.

“Money isn’t a protected funding, isn’t a protected place as a result of it is going to be taxed by inflation,” Dalio instructed CNBC final 12 months.

This week, when CNBC requested him about his present opinion on money, Dalio’s response was unchanged: “Money continues to be trash.”

It’s simple to see the place his concern comes from. U.S. client costs surged 8.3% in April from a 12 months in the past — down barely from 8.5% in March, however nonetheless close to 40-year highs.

Merely put, the buying energy of money is taking a big hit. Let’s check out what Dalio’s hedge fund holds as an alternative.

Sign up for our MoneyWise publication to obtain a gradual circulation of actionable ideas from Wall Avenue’s high companies.

Vanguard FTSE Rising Markets ETF (VWO)

Based on Bridgewater’s newest 13F submitting to the SEC, the fund held 22.72 million shares of Vanguard FTSE Rising Markets ETF on the finish of March. With a market worth of round $1.05 billion on the time, VWO was the biggest holding in Dalio’s portfolio.

VWO tracks the FTSE Rising Markets All Cap China A Inclusion Index and gives buyers with handy publicity to shares in rising markets like China, Brazil, and South Africa.

The ETF holds greater than 5,000 shares. Its high holdings embrace business heavyweights like chipmaking big Taiwan Semiconductor Manufacturing, Chinese language tech behemoth Tencent Holdings, and Indian multinational conglomerate Reliance Industries.

In a latest dialog with one other investing legend, Jeremy Grantham, Dalio mentioned he’s international locations with good earnings statements and steadiness sheets that may weather the storm.

“Rising Asia may be very fascinating. India is fascinating,” he provides.

Procter & Gamble (PG)

Bridgewater’s second-largest holding is a defensive inventory with the power to ship money returns to buyers in numerous financial environments: Procter & Gamble.

Story continues

Final month, P&G’s board introduced a 5% dividend enhance, marking the corporate’s 66th consecutive annual payout enhance. The inventory at present gives an annual dividend yield of two.5%.

It’s simple to see why the corporate is ready to keep such a streak.

P&G is a client staples big with a portfolio of trusted manufacturers like Bounty paper towels, Crest toothpaste, Gillette razor blades, and Tide detergent. These are merchandise that households purchase regularly, no matter what the financial system is doing.

Alibaba Group Holding (BABA)

Chinese language tech shares haven’t precisely been market darlings. Ecommerce big Alibaba Group, as an illustration, is down 21% 12 months thus far and 55% during the last 12 months.

However Bridgewater Associates nonetheless likes the corporate. As of Mar. 31, it owned 7.5 million shares of Alibaba — a stake valued at $813.9 million on the time.

The downturn in Alibaba shares might give contrarian investors one thing to consider. In actual fact, we is perhaps at an inflection level already.

The corporate reported earnings on Thursday morning. Within the March quarter, income grew 9% 12 months over 12 months to $32.2 billion. Its adjusted earnings of $1.55 per share handsomely beat Wall Avenue’s expectation of $1.07 per share.

Because of a stable earnings report, Alibaba closed with a virtually 15% achieve on Thursday.

Sign up for our MoneyWise publication to obtain a gradual circulation of actionable ideas from Wall Avenue’s high companies.

Extra from MoneyWise

This text gives info solely and shouldn’t be construed as recommendation. It’s supplied with out guarantee of any form.