(REUTERS) -- The world's biggest hedge fund Bridgewater Associates posted returns of 23 percent in 2011, in a year when most of its peers underperformed the major stock market indexes, the New York Times reported, citing people familiar with the firm's investment strategy.

The $1.7 trillion hedge fund industry suffered due to Europe's debt crisis, a slower-than-expected economic recovery in the United States, and unforeseen events like Japan's nuclear disaster -- a trend bucked by Bridgewater, which manages nearly $120 billion.

For 2012, Bridgewater is betting on gold, the Australian dollar and several emerging-market currencies, the paper said.

The managers are said to believe that governments will need to print more money to help reduce mounting sovereign debt, which could hurt the dollar but help gold, the paper reported.

The firm was not available for comment.