Wednesday 1 February 2017 3:52 pm

World's largest hedge fund warns on Trump

The founder of Bridgewater Associates, Ray Dalio has told investors he is increasingly concerned that Trump’s “populist” programme will be harmful to the world economy in the long-term.

Dalio had been optimistic about the so-called “Trump Bump” back in November last year.

Bridgewater’s co-chief investment officer Bob Prince joined Dalio in making the warning in a note to investors:

“We are now in a period of time when how this balance tilts will be more important to the economy, markets and our well-beings than normally dominant drivers such as central bank policies.”

The pair warned that Trump’s populist policies could offset the pro-businesses policies that have buoyed stock markets in the weeks following his election in November.

“While there is a lot of potential to improve fiscal policies and make beneficial structural reforms, there is also a significant risk that his populist policies could hurt the world economy (and worse).”

Dalio has been more upbeat about the Trump administration, telling his followers on LinkedIn in December: "It wants to, and probably will, shift the environment from one that makes profit makers villains with limited power to one that makes them heroes with significant power.

“The shift from the past administration to this administration will probably be even more significant than the 1979-82 shift from the socialists to the capitalists in the UK, US, and Germany when Margaret Thatcher, Ronald Reagan, and Helmut Kohl came to power."

In a post on the professional networking site last year, he recommended reading Margaret Thatcher’s “The Downing Street Years” to better understand the shift he described.

Headquartered in Westport, Connecticut, Bridgewater Associates has $150bn assets under management and around 1,700 employees across its operations. It principally serves institutional clients such as pension funds, central banks and foundations.

President Trump has plans to slash the US corporation tax rate, impose trade tariffs on certain countries, and reduce regulation for both small and large businesses in the States.