Bridgewater Associates founder Ray Dalio told hedge fund industry leaders to stop being glorified index funds. His challenge to his peers was issued during the HFM 2010 US Performance Awards at the end of October, reports HFMWeek. Since Dalio did not attend, his co-chief investment officers delivered his message to the some 650 managers who attended the ceremony.

In his prepared statement, Dalio wrote that it’s a tragedy that “the average hedge fund is about 70% correlated with equities,” says the report, adding that jettisoning this strategy will make the industry much more attractive to institutional investors. Bridgewater’s investors are large institutions and sovereign wealth funds.

Dalio’s remarks were presented by Robert Prince and Greg Jensen, who was Number 11 on Fortune’s 40 Under 40 list, and he was honored that evening with HFM’s Special Contribution Award.

Greed was also on Dalio’s mind. According to HFMWeek, he wrote that hedge funds must evolve from “owner-operated boutiques primarily focused on making lots of money for their owners to rock-solid institutions that have cultures that put meaningful work and meaningful relationships above all else.” And he added: “Just because we are in the money-making business doesn’t mean that we have to put making money above all else.”

Bridgewater declined to comment.

Dalio is considered a quirky guy, even within an industry that attracts the finance people who don’t fit in with Wall Street’s more straight-laced culture. He runs his $86 billion firm in accordance with 295 personal principles that place the pursuit of truth above all else.

Bridgewater’s flagship fund is up about 38% so far this year (versus the hedge fund industry’s average return of about 5%,) thanks to a big bearish bet on the economy that reflects the firm’s belief that we’re in the midst of an extended period of negative economic adjustments. To make money, he was bullish this year on Treasuries, the yen, and gold.

When Dalio talked to Fortune about this phenomenon back in March, he referred to it as the D-process. While a recession is a contraction in real GDP brought on by central bank tightening that ends when the central bank eases, a D-process happens when an economy has an unsustainably high debt burden and monetary policy stops working. In Dalio’s view, the bank must then print money or the country must write down the value of its debt, or some combination of the two. Dalio followers are convinced that the current ultra low rate environment and Federal Reserve decision to buy $600 billion in long-term Treasuries over the next eight months are evidence that the Dalio is right about the economy.

It’s unlikely that the D-process was top of mind at an event that was held at Manhattan’s swanky 583 Park Avenue. Even so, hedge funders may want to take Dalio’s latest edict seriously. It seems, after all, that he was right about the economy’s massive structural shift. Why bet against him when it comes to the hedge fund industry’s current sea change?