As Recession Fears Loom, Ray Dalio Releases ETF Following His Famed All Weather Investment Strategy

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. 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, billionaire hedge fund giant Ray Dalio's recent release of an exchange-traded fund (ETF) that could help investors weather any potential storm looks particularly timely. Let's take a closer look.

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Dalio's strength in strategies

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 just a few months ago, he partnered with State Street Global Advisors to open up this strategy to a broader range of investors. With State Street, Dalio is offering the SPDR Bridgewater All Weather ETF (NASDAQ: ALLW), based on the principles of his All Weather strategy.

Dalio's All Weather investments generally include the following:

-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 commodities to support performance during inflationary periods

The billionaire's 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. You might favor those high-growth players -- but it's still 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.

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*Stock Advisor returns as of April 5, 2025

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.