Chinese Hedge Funds Rush to Launch ‘All Weather’ Style Products to Mitigate Volatility
Chinese hedge fund managers are scrambling to launch products similar to Bridgewater Associates’ popular “All Weather” strategy, amid hot demand from investors seeking protection against expected market volatility during Donald Trump’s second term as US President. Bridgewater’s “All Weather” strategy, created by founder Ray Dalio, is designed to mitigate volatility and perform well in any economic condition. It helped shield Chinese clients from the impact of the Sino-U.S. trade war during Trump’s first term.
The highly sought-after strategy posted a remarkable 37% return last year, eclipsing most rival hedge fund products. Bridgewater’s onshore China strategy has become a favorite among investors, prompting the company to limit sales of its onshore funds. In response, a dozen hedge funds have launched “All Weather” tagged products since Trump’s election win in early November, according to official registration data.
Major local players, such as SHQX Asset Management and Shanghai Luoshu Investment Co, have also launched similar strategies. Luoshu’s head of marketing, Yin Zhengxin, predicts that local fund managers will excel in the “All Weather” strategy over the next 3-5 years, potentially undercutting Bridgewater’s dominance.
Global hedge fund titan Man Group is also entering the market, with its China unit preparing to offer mainland investors access to its AHL TargetRisk strategy, which is based on the “All Weather” concept. Other Chinese hedge funds, including Jroyal Asset, Rongsheng Fund, and Shanghai Lanyin Capital Management Co, have also rolled out similar products.
The popularity of the “All Weather” strategy can be attributed to the increasing demand for a cushion against expected volatility in the markets. As global economist Carlos Casanova notes, “everyone was so worried about Trump and what would happen” after his inauguration, leading to a huge flight to safety among Chinese investors. With the ongoing US-China trade tensions and global economic uncertainty, the demand for products that can mitigate volatility is expected to remain high.
