Bridgewater Associates LP’s flagship China fund is trouncing the performance of its peers, helping to expand the hedge fund’s leadership in the race among global firms looking to woo the nation’s wealthy investors.
(Bloomberg) — Bridgewater Associates LP’s flagship China fund is trouncing the performance of its peers, helping to expand the hedge fund’s leadership in the race among global firms looking to woo the nation’s wealthy investors.
Onshore China assets under management at the Westport, Connecticut-based investment company climbed to more than 30 billion yuan ($4.1 billion) as of August, after doubling last year to more than 20 billion yuan, according to people familiar with the matter, asking not to be identified discussing confidential information.
The All Weather Plus No. 2 fund jumped 11% this year as of Aug. 31, according to an investor letter seen by Bloomberg. That compares to the 3.5% average among local multi-asset funds and tops every other fund in that category managing more than 10 billion yuan, data compiled by Shenzhen PaiPaiWang Investment & Management Co. showed.
Bridgewater is widening its lead on rivals such as Winton Group and Two Sigma Investments LP, which manage less than 10 billion yuan. All Weather’s breadth of asset classes from stocks to bonds and commodities is helping to cushion it against the wild swings in China’s markets, improving its track record and appeal to local clients.
The diversified portfolio “showed its advantages in controlling drawdowns in volatile markets,” the company said in the letter.
Bridgewater declined to comment.
The China fund gained 0.3% before fees in August, compared to a 6.2% slump in the CSI 300 Index stock gauge. China’s policy moves to boost growth and the property market provided a “relatively favorable” environment for its basket of risk assets, according to the letter.
Bridgewater told investors at a road show last month it’s bullish on China bonds as accommodative policy will likely continue with growth and inflation staying low, the people said. The company also sees value in Chinese stocks as valuations are low, but is cautious on commodities amid the property-market downturn and weakening global demand.
Top global players are gradually winning the trust of some Chinese investors after a slow initial expansion when regulators first eased market access in 2016. Still, the majority of foreign-invested hedge funds run less than 500 million yuan. A larger asset base is becoming more important as an imminent regulatory revamp in the country is expected to push up costs and wipe out thousands of small players.
Bridgewater told investors that even though the markets the fund trades in are large and highly liquid, providing ample capacity for the strategy, the company is pacing asset growth to ensure returns and service quality, the people said. The subscription threshold is 5 million yuan, compared to a 1 million yuan regulatory minimum.
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