Ray Dalio of Bridgewater Associates, one of the world's largest and most closely-watched hedge fund investors, said Tuesday that the economic environment is too fragile for the U.S. Federal Reserve to raise interest rates later this month.

"The risks are so much more on the downside," Dalio, chairman and co-chief investment officer of $150 billion Bridgewater, said Tuesday at the CNBC Institutional Investor Delivering Alpha Conference in New York.

Dalio disagreed with J.P. Morgan Chief Executive Jamie Dimon, who said recently that the Fed should raise rates sooner rather than later.

"That's wrong," Dalio responded.

Dalio, speaking alongside former Secretary of the Treasury Timothy Geithner, acknowledged that the Fed, like other central banks, has little room to maneuver in future recessions given interest rates that are already near zero.

"If you have a downturn and you don't have that power -we've never been in a world that's been like this," Dalio said.

Dalio said a realistic economic growth rate in the U.S. would be about 1.5 percent to 2 percent.

On China, Dalio praised what he called highly capable leaders that would be able to manage through the restructuring of its debt, economy and capital markets.

"I'm not saying it's not challenging but the idea that's going to blow up ... is a very exaggerated notion," Dalio said.

Bridgewater's flagship hedge fund, Pure Alpha, is down about 9 percent this year through Sept. 9, according to a person familiar with the situation.

But Bridgewater has attracted $22.5 billion in net new client money since 2015, according to the same person. The figures were first reported by Bloomberg.