Bridgewater Up 23%

In 2011, Bridgewater Associates showed why it is the biggest—and one of the most respected—hedge funds in the world.

The Westport, Conn.-based behemoth, with almost $120 billion in assets under management, isn't crumpling under the weight of all that money. The firm returned 23% last year—the second-worst for hedge funds on record, when the average fund lost about 5%.

Bridgewater's returns were driven by investments in U.S. and German bonds, as well as on the Japanese yen, The New York Times reports.

The firm returned about 45% in 2010 after earning modest gains in both 2008—the worst year for performance in hedge fund history—and 2009.

This year, Bridgewater has joined the gold bulls, seeking to hedge against inflation. In the same vein, it is betting against a number of emerging-market currencies and the Australian dollar.