Ray Dalio was blindsided by the coronavirus market rout, and now his flagship fund is down 20% this year

• Ray Dalio was blindsided by the market sell-off sparked by coronavirus this month, he told the Financial Times.
• The billionaire founder of Bridgewater Associates didn't pull out of stocks, commodities, and other assets before they tumbled in recent days.
• Bridgewater's flagship Pure Alpha Fund II is down 13% in March and 20% for the year, the Financial Times reported.
• "We're disappointed because we should have made money rather than lost money in this move the way we did in 2008," Dalio told the newspaper.
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Billionaire hedge fund manager Ray Dalio was caught off guard by the coronavirus-fueled market sell-off this month, he told the Financial Times.

The founder of Bridgewater Associates - the world's largest hedge fund with about $160 billion in assets under management - didn't escape stocks, commodities, and other assets before they tumbled in recent days.

"We did not know how to navigate the virus and chose not to because we didn't think we had an edge in trading it," Dalio told the Financial Times on Sundau. "So, we stayed in our positions and in retrospect we should have cut all risk."

Bridgewater's flagship Pure Alpha Fund II began this month betting that equities and Treasury yields would rise, a source told the Financial Times. However, both plunged due to escalating fears of the economic fallout from coronavirus and the breakout of an oil-price war.

As a result, the fund's value has dropped 13% this month, two sources told the Financial Times. It fell 8% over the course of January and February, leaving it down about 20% this year.

"We're disappointed because we should have made money rather than lost money in this move the way we did in 2008," Dalio told the Financial Times.

The famous fund posted a 9.4% gain in 2008, striking a sharp contrast to the 37% decline in the S&P 500 that year, the newspaper said.

Read more: Massive hedge fund Bridgewater just made an $11.8 billion bet against giant European companies like Bayer, Santander, and Adidas as the coronavirus spread has Italy on lockdown

Dalio underscored the abnormality of the current trading environment in a LinkedIn post on Monday.

"I wasn't, and still am not, able to anticipate the most important things happening in the markets because of the extremely rare nature of the circumstances," he said.

Looking back, it appears that Dalio made the wrong call when he warned investors not to ditch stocks for dollars in a CNBC interview in January, declaring that "cash is trash."