By Summer Zhen and Samuel Shen
HONG KONG/SHANGHAI (Reuters) - Bridgewater has doubled its fund assets in China to more than 20 billion yuan ($2.93 billion) over the past year, according to two sources and government data, a feat that cements its position as the biggest foreign hedge fund in the country.
The jump was aided by Bridgewater China's raising of 2.7 billion yuan through a product launch in December, said the sources. That further underlined the popularity in China of billionaire founder Ray Dalio, a self-proclaimed Sinophile, and his "All Weather" strategy.
Connecticut-based Bridgewater launched its first onshore China fund in 2018, and three years later its assets under management (AUM) in China exceeded 10 billion yuan, catapulting the firm past Winton and Man Group to become the biggest foreign hedge fund house in the country. Stellar growth last year further strengthened its leadership.
Bridgewater's business boom is rare for global fund managers in China, many of whom are struggling to grow in the $10 trillion, highly competitive asset management market.
"Bridgewater goes to show that building a scaled business in China is very much possible," said Peter Alexander, managing director of fund consultancy Z-Ben Advisors, adding its growth has shattered the myth that foreigners cannot compete locally.
"The commentary surrounding China as being too competitive or that foreign firms face certain barriers to growth are simply untrue."
Graphic: Bridgewater China fund performance https://www.reuters.com/graphics/BRIDGEWATER-CHINA/FUND/zdpxdrddjpx/chart.png
By early November, Bridgewater's onshore China funds grew to roughly 19 billion yuan, Shanghai government data showed.
It sold a series of feeder funds via China Merchants Bank in December, raising 2.7 billion yuan, said the two sources.
Bridgewater declined to comment. The sources, who were familiar with the matter, did not wish to be named as they are not authorised to speak to the media.
'ALL WEATHER' STRATEGY
Bridgewater's "All Weather" strategy, a multi-asset investment approach structured to be indifferent to shifts in economic conditions, caught on in China, where unpredictable "black swan" events including Beijing's tech crackdown, the Russia-Ukraine war, and COVID-19 lockdowns have roiled markets.
The steady performance of Bridgewater's China funds - mainly targeting wealthy individuals - was highlighted in the hedge fund firm's sales pitch, which was seen by Reuters. Bridgewater's first China fund achieved an annualised return of 15.6% in the four years following its October 2018 launch. That compares with a 3.7% return for the CSI300 Index, and 5% for Chinese treasuries.
Another fund, launched in December 2021, delivered a net return of 8.4% from inception till December 2022, said one of the sources. China's stock market plunged over 20% last year.
Besides returns, another selling point was Dalio's long connection with China, and the firm's deep understanding of China cycles since the ancient Tang dynasty. Chen Yin, head of Bridgewater's China strategy, said during a roadshow last month that fund size is not a priority.
"Ray often told us: don't always think of fundraising, or business size in China," Chen said. "If we set the highest bar for ourselves, and do things beautifully, inevitably, we will get recognition from the market."