Bridgewater nearly doubles its China assets to about 40 billion yuan as investors flock to its funds

Hedge fund Bridgewater Associates’ China business is set to grow to about 40 billion yuan (US$5.56 billion) following a fresh round of fundraising, a source familiar with the matter said, marking a doubling of assets over the past year while local rivals have struggled.

The US fund is raising an additional 2 billion yuan for an existing fund in January and has seen strong demand, with nearly all the fund units being sold within the first four days of the subscription period that began on January 15, according to distributors and investors.

That contrasts sharply with the difficulties many local funds are facing when trying to raise cash from investors in China’s weak markets. Bridgewater declined to comment on the company’s fundraising and business updates.

Bridgewater’s funds have done well in China, even as the economy struggles and with the stock market enduring years of declines. The firm’s All Weather Plus fund, a yuan-denominated flagship product that invests in stocks, bonds and commodities, posted a net return of 10.3 per cent last year, the source said.

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Bridgewater’s asset size in mainland China has been growing rapidly throughout the past year. With the latest fundraising round, distributed by China Merchants Bank, the firm’s assets under management are expected to approach 40 billion yuan, according to the source familiar with the matter, compared with 20 billion yuan at the beginning of 2023.

That further consolidates Bridgewater’s position as the largest foreign hedge fund in the country. The asset sizes of most foreign managers remain below 10 billion yuan in China.

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Peter Alexander, managing director of fund consultancy Z-Ben Advisors, said Bridgewater’s success suggests “China isn’t at all a difficult market in which to grow”.

The scarcity of yield in mainland China has made Bridgewater’s products particularly attractive to the nation’s wealthy investors.

Its “All Weather” strategy, conceived by founder and long-time China enthusiast and investor Ray Dalio, has shown a low correlation with broader Chinese equity markets, which have been falling for the past three years. The CSI300 Index dipped 4.5 per cent in 2023.

World’s biggest hedge fund does far better in China than elsewhere

Bridgewater’s first China fund generated an annualised return of 15.3 per cent from its launch in October 2018 to the end of 2023, according to marketing material seen by Reuters, compared with 2.9 per cent for the CSI300 Index and 4.7 per cent for Chinese treasuries.

China’s domestic equity hedge funds on average lost 2.1 per cent in the previous year, according to data from fund distributor Simuwang.com, while multi-asset hedge funds returned 2.8 per cent.

Reuters reported in September that Bridgewater’s gain in 2023 was largely driven by a rally in the mainland bond market.