Finance

Rich nations can’t pay for entire world, says hedge fund guru

October 17, 2023, 12:13 PM

Ray Dalio, the billionaire founder of Bridgewater Associates, spoke on the opening day of the UN Conference on Trade and Development's World Investment Forum in Abu Dhabi

Private investors are key, says Bridgewater’s Ray Dalio
UN forum taking place in Abu Dhabi
Climate change to cost up to $10 trillion a year

The founder of the world’s largest hedge fund has told a UN investment conference that the governments of developed countries cannot be expected to take care of the rest of the world.

Ray Dalio of Bridgewater Associates, the US-based fund with $124 billion of assets under management, said those nations’ financial burdens were too big and their governments were already constrained.

“The developed world accounts for just 15 percent of the world population. Its governments materially helping 85 percent of the world’s population outside its borders is unrealistic,” the 74-year-old told the UN Conference on Trade and Development’s World Investment Forum in Abu Dhabi.

He pointed out that climate change is predicted to cost the world 5 to 10 percent of global GDP, amounting to $5 trillion-$10 trillion each year.

These massive amounts are to be found in capital markets, rather than among public bodies, said Dalio, who has a personal fortune of more than $15 billion and has donated over $1 billion to philanthropic causes, according to Forbes.

“The assets of all multilateral development banks combined, including the World Bank and all regional development banks, are only about $2 trillion, which is essentially nothing compared with the size of the challenge,” he said.

The big money is in the hands of firms and investors looking for good returns and with the right regulatory incentives can be injected into green projects.

“There’s about $200 trillion in liquid markets and another $200 trillion in assets of private, illiquid markets,” Dalio added.

Getting climate finance to the countries and people that need it most is a key topic for the forum, taking place from October 16 to 20, as well as for Cop28, which begins on November 30 in Dubai.

A $6 trillion-plus market

Rebeca Grynspan, secretary-general of the UN Conference on Trade and Development, also spoke on the forum’s opening day.

She said the sustainable finance market was “now worth over $6 trillion”, but investment was not making the difference it should.

Grynspan pointed out that 3.3 billion people live in countries where debt services exceed spending on health or education, as interest rates rise and pandemic-era debts mount.

As these debts increase, they drown out development, spending and investment, she said.

In a video message to the forum UN secretary-general António Guterres urged private and public sectors to work towards delivering $500 billion in annual investment for developing countries.

He called for action “to get quality finance flowing, to put children in classrooms and food on tables, and to prevent climate catastrophe”.

Guterres added: “International investment in agriculture has stagnated; in renewables, it lags far behind the needs of developing countries.

“The clock is ticking. I urge you to make this meeting count.”

He also called on governments to establish a fair price on carbon and companies to implement credible net-zero plans.

The UN estimates that $4 trillion a year needs to be invested in renewable energy by 2030 to reach net-zero emissions by 2050.