Chinese language buyers pile into Bridgewater-style funds, eyeing Trump return

By Samuel Shen and Summer time Zhen

SHANGHAI/HONG KONG (Reuters) -Chinese language hedge fund managers are racing to launch merchandise styled on Bridgewater Associates’ fashionable “All Climate” technique, to satisfy sizzling investor demand for a cushion in opposition to anticipated volatility throughout Donald Trump’s second U.S. presidency.

Bridgewater founder Ray Dalio’s “All Climate” is a volatility-mitigating, multi-asset technique that helped protect its Chinese language purchasers from the brunt of the Sino-U.S. commerce conflict throughout Trump’s first time period.

The extremely sought-after Bridgewater onshore China technique eclipsed most rival hedge fund merchandise final yr with an eye-popping 37% return.

Demand for the technique has soared since Trump received the election in November and revived threats of upper commerce tariffs on China. However Bridgewater has been drawing billions of yuan and needed to restrict the gross sales of its onshore funds, prompting a spread of rival product launches.

At the very least a dozen hedge funds with “All Climate” tags which might be in search of to piggyback on Bridgewater’s success have been launched since Trump’s election win in early November, selecting up tempo from earlier months, in line with official registration information.

Main native gamers similar to SHQX Asset Administration and Shanghai Luoshu Funding Co have additionally launched related methods.

Yin Zhengxin, head of promoting at Luoshu, which is elevating cash for competing merchandise, compares the rivalry to how Tesla (NASDAQ:TSLA)’s entry galvanised China’s electrical car trade.

“We’ll see native fund managers excel in All Climate technique within the subsequent 3-5 years, doubtlessly undercutting Bridgewater’s dominance,” he mentioned.

The chance has even lured world hedge fund titan Man Group (LON:EMG), whose China unit is getting ready to supply mainland buyers entry to its AHL TargetRisk technique that’s based mostly on ‘threat parity’, the idea underpinning “All Climate”, in line with two sources aware of the plan.

Bridgewater didn’t instantly reply to Reuters’ requests for remark. Man Group declined to touch upon the product plan.

FLIGHT TO SAFETY

“All Climate” was designed by Dalio, a long-time China bull, in 1996 and diversifies investments throughout belongings together with shares, bonds and commodities whereas balancing dangers in order that it performs properly in any financial situation – growth or bust, inflation or deflation.

Bridgewater China’s “All Climate” product was launched in 2018 and proved resilient through the Sino-U.S. commerce conflict, the COVID-19 pandemic, and even final spring’s “quant quake” that swiped many Chinese language hedge funds.

Bridgewater China managed about 40 billion yuan firstly of 2024 in line with sources, and its belongings doubtless ballooned additional over the previous yr. It posted optimistic returns yearly previously 5 years regardless of a struggling Chinese language financial system.

“When future uncertainty spikes, folks would have issues placing cash into single-risk belongings,” mentioned Lv Chengtao, president of SHQX Asset, certainly one of China’s greatest commodities-trading hedge funds with over 10 billion yuan ($1.37 billion) below administration.

The corporate’s newly launched “All Climate” merchandise drew massive inflows within the second half of final yr, reflecting the recognition of the technique, Lv mentioned.

Shanghai Quantinv Asset Administration Co additionally launched its personal “All Climate”-type technique, drawing inspiration from Bridgewater, chairman Qian Cheng mentioned.

Different Chinese language hedge fund managers which have rolled out related merchandise embody Jroyal Asset, Rongsheng Fund and Shanghai Lanyin Capital Administration Co, in line with the businesses’ disclosures.

Carlos Casanova, Asia senior economist at UBP, mentioned there was an enormous flight to security amongst Chinese language buyers and “everybody was so fearful about Trump and what would occur” after his inauguration.

($1 = 7.3152 yuan)