The largest hedge fund manager in the world is convinced the market is not a bubble about to burst.
"We think asset prices are high and, as a result, the future expected returns of passive investing are likely to be low. But ... we do not see current conditions as a bubble," Greg Jensen and Jacob Kline of Bridgewater Associates wrote in a private note to clients on May 1 obtained by CNBC.com.
Jensen is co-chief investment officer of Bridgewater along with founder Ray Dalio and Bob Prince. The Westport, Connecticut-based firm manages $169 billion for institutional clients like pensions and endowments and its economic views are widely followed and respected.
A spokesman for Bridgewater declined to comment.
While Bridgewater doesn't think there's a bubble, Dalio has said he believes the U.S. is in a long-term period of slower growth—so-called secular stagnation.
Dalio believes the Federal Reserve and other central banks have limited policy tools given already near-zero interest rates. That means less lending, and therefore less investment and lower economic growth. Bridgewater is avoiding "any concentrated bets" as a result.
The firm's main macroeconomic hedge fund, Pure Alpha II, is up about 13 percent net of fees this year through April. It's annualized return since inception in December 1991 is 13.5 percent, according to performance figures obtained by CNBC.com
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