OTHER than the obvious task of picking good investments, the most difficult trade for most hedge funds is swapping old bosses for new. Banks tout histories measured in centuries; many mutual funds have thrived for decades, through multiple managers and owners. Successful hedge funds, in contrast, with their unique investment strategies, tend to struggle with changes of leadership. In recent weeks Bridgewater, a giant of the industry with $154 billion under management, has been providing ample evidence of this. Bridgewater is in the middle of a ten-year “planful transition” in which its founder, Ray Dalio, has promised to relinquish both his majority ownership and management control. The first part appears to be going according to plan: Mr Dalio says he now holds only a “significant minority” of shares, having sold the rest of his holding to other employees. But he is still co-chief investment officer, among other roles.

Mr Dalio recently became involved in a semi-public spat with Greg Jensen, who was co-CEO until complaining that the planful transition was not going according to plan (he remains co-chief investment officer). Mr Dalio, in turn, complained that Mr Jensen was violating the company’s principles by criticising him behind his back. Shortly afterwards Bridgewater hired Jon Rubinstein, a former Apple executive, as a new co-CEO.

Mr Dalio dismisses all the fuss as part of Bridgewater’s “radically transparent culture”, in which disagreements are supposed to be voiced and settled openly (although not publicly). Both he and Mr Jensen maintain that their dispute has been resolved. Mr Dalio says he will continue to pull back from management, and ultimately hopes to become something of a “mentor”, who does not handle day-to-day decisions but remains involved. He cites the example of Lee Kuan Yew, who relinquished the title of prime minister and gradually stood back from running Singapore over a number of years (at one point styling himself “minister mentor”).

Mr Dalio says he would judge himself a failure if the firm wilted without him. He believes that its unusual culture, which he has outlined in a 106-page statement of principles, helpfully broken down into 210 distinct points, is strong and effective enough to last without him. The most important of these, “truth”, is accompanied by bruising corollaries, such as “Don’t depersonalise mistakes” and “Don’t pick your battles. Fight them all.” The goal of employee evaluations is to be accurate, not kind. Meetings are recorded, aiding evaluation. Potential recruits are asked cryptic questions in interviews, such as, “Do you like something firm or soft?”

This eccentric approach might be dismissed were it not for Bridgewater’s remarkable success. Its Alpha Fund has had only three down years since its inception in 1991 (see chart). Clients, the firm says, remain untroubled by the current hullabaloo. Perhaps they are reassured by principle number 136: “Understand that problems are the fuel for improvement.”