Billionaire Ray Dalio's 9 Top Stock and ETF Picks

Ray Dalio owns these nine stocks and ETFs.

Ray Dalio's Bridgewater Associates is the world's largest hedge fund with nearly $140 billion in assets. Dalio himself has a net worth of roughly $16.9 billion, according to Forbes. Bridgewater's popular Pure Alpha II fund has struggled during the wild market swings in 2020, generating an 18.6% decline through the end of August. However, Dalio and the Pure Alpha II fund have a track record of thriving during market recovery periods, including 45% and 25% gains in 2010 and 2011, respectively. Here are Bridgewater's nine top stock and fund holdings, according to its latest 13F filings.

SPDR S&P 500 ETF Trust (ticker: SPY)

The good news for U.S. stock investors is that Dalio's single biggest investment is State Street's SPY S&P 500 exchange-traded fund. In other words, Dalio is betting the recovery in the U.S. stock market will continue, even though the underlying economic recovery hasn't been quite as robust up to this point. The S&P 500 is weighted by market capitalization, meaning its top holdings include Apple (AAPL), Microsoft Corp. (MSFT) and Amazon.com (AMZN). Bridgewater owns more than 5.04 million shares of the SPY ETF worth $1.55 billion, or about 26.1% of Bridgewater's total portfolio.

SPDR Gold Shares (GLD)

Bridgewater's second-largest holding is SPDR Gold Shares. The GLD fund is the most popular way for investors to bet on the price of gold. Back in March, the federal government implemented an unprecedented $2 trillion stimulus package, and a second massive stimulus bill appears to be just around the corner. Investors like Dalio are rightfully concerned about the long-term implications of printing so much money, and gold has long been one of the most popular hedges against inflation. Bridgewater holds 5.46 million shares of the GLD fund worth about $914.2 million.

iShares Core S&P 500 ETF (IVV)

The iShares Core S&P 500 ETF is an S&P 500 fund that's similar to the SPY fund but is issued by iShares. The fund has a minuscule 0.03% expense ratio and plenty of liquidity, and it tracks the S&P 500. Likely the only reason Dalio owns both the SPY and the IVV ETFs is to diversify his exposure to the S&P 500. The IVV fund has generated a total return of roughly 7% year to date. Bridgewater owns 1.66 million shares of the IVV fund, which is worth about $516.1 million.

iShares Gold Trust (IAU)

The iShares Gold Trust is another popular fund that tracks the price of gold. Like the IVV complements the SPY in Bridgewater's portfolio, the IAU is a way for Dalio to diversify his fund's bet on rising gold prices. The IAU isn't as liquid as the GLD, but it still has plenty of liquidity. It is also among the lowest-cost ways for investors to bet on gold given the fund's expense ratio is just 0.25% compared with 0.4% for the GLD fund. Bridgewater holds 15.7 million shares of the IAU fund worth $268.4 million.

Alibaba Group Holding (BABA)

Alibaba is China's leader in cloud services and e-commerce, and it's Bridgewater's single largest individual stock holding. Alibaba has been a top performer in 2020, gaining about 46%. Online sales and cloud services have thrived during social distancing. Alibaba reported 33.7% revenue growth and 121.6% net income growth in the most recent quarter. China stocks could also get a big boost if Joe Biden wins the presidential election given President Donald Trump has taken a combative approach to China during his first term. Bridgewater owns 950,598 shares of BABA stock worth $205 million.

iShares China Large-Cap ETF (FXI)

Alibaba is Dalio's biggest bet on China, but it's not his only one. The iShares China Large-Cap ETF is the most popular ETF with exposure to Chinese stocks. It tracks the FTSE China 25 Index. In addition to Alibaba, the fund's top stock holdings are other major Chinese stocks that are not listed on large exchanges in the U.S., including Tencent, Meituan Dianping and China Construction Bank. Normalization of trade relations between the U.S. and China would likely be a bullish catalyst for the FXI fund. Bridgewater owns 4.77 million shares of the FXI fund worth $189.6 million.

iShares MSCI China ETF (MCHI)

Dalio is also bullish on the iShares MSCI China ETF. The MCHI fund isn't as popular and liquid as the FXI ETF, but it is much more diversified given it tracks the MSCI China Index. Instead of the 51 total holdings in the FXI ETF, the MCHI has 607 total holdings, including top two Alibaba and Tencent, which represent a combined 34% of the fund's allocation. The MCHI has a 0.59% expense ratio, making it cheaper to own than the FXI fund at 0.74%. Bridgewater holds 2.3 million shares of the MCHI fund worth $150.4 million.

Vanguard FTSE Developed Markets ETF (VEA)

The Vanguard FTSE Developed Markets ETF provides diversified exposure to developed-market economies outside of North America, including Western Europe, Japan and Australia. The fund tracks the MSCI EAFE Index and is extremely diversified with almost 4,000 stocks. Top holdings include Swiss chocolate giant Nestle (NSRGY), Swiss health care company Roche Holding (RHHBY) and South Korean electronics juggernaut Samsung Electronics Co. (SSNLF). Dalio clearly seems to be more bullish on the U.S. and Chinese markets than other developed markets, but the VEA fund provides geographical diversification. Bridgewater holds 3.71 million shares of the VEA fund worth $144.1 million.

iShares MSCI EAFE ETF (EFA)

Following his pattern of never putting all of his eggs in one basket, Dalio is also heavily invested in the iShares MSCI EAFE ETF. The EFA fund provides exposure to developed-market economies outside of North America by tracking the MSCI EAFE Index. The EFA fund is iShares' slightly less popular version of Vanguard's VEA fund. It's understandable that Dalio prefers the VEA fund to be his slightly larger investment of the two given it has a lower expense ratio and slightly less historical tracking error. Bridgewater owns 2.34 million shares of the EFA fund worth $142.5 million.

Ray Dalio's top ETF and stock holdings:

-- SPDR S&P 500 ETF Trust (SPY)

-- SPDR Gold Shares (GLD)

-- iShares Core S&P 500 ETF (IVV)

-- iShares Gold Trust (IAU)

-- Alibaba Group Holding (BABA)

-- iShares China Large-Cap ETF (FXI)

-- iShares MSCI China ETF (MCHI)

-- Vanguard FTSE Developed Markets ETF (VEA)

-- iShares MSCI EAFE ETF (EFA)