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Hedge Funds

Bridgewater prepares Chinese version of All Weather risk-parity strategy

Firm could also pursue a private fund management license to offer version to local Chinese investors

Updated with correction

Bridgewater Associates is developing an offshore all-Chinese version of its All Weather strategy from its Westport, Conn., office for its existing non-Chinese institutional clients.

The newest version of Bridgewater's All Weather risk-parity strategy will combine investment in Chinese assets currently available to foreign investors — equities and bonds — with global inflation-linked bonds and commodity futures where necessary, said a source with knowledge of the firm's plans who requested anonymity, in an email.

The yuan-denominated offshore strategy is designed to help the firm's non-Chinese investors "fill the China gap in their asset allocations through a liquid investment that is … structured to maximize diversification," the source said.

Bridgewater has managed assets in external markets globally for Chinese asset owners since 1993.

The source said Bridgewater might try to obtain a private fund management license later this year so it can offer an onshore, all-Chinese version of All Weather for local Chinese investors.

Bridgewater registered as a wholly foreign-owned enterprise in May 2016. The firm first accessed the Hong Kong Stock Exchange and trading H shares in 2012; registered on the Shanghai-Hong Kong stock exchange in 2015 to access A shares; and obtained a China interbank bond market license in 2016 to trade Chinese bonds within its existing funds and products.

Bridgewater currently manages $165 billion for 350 institutional investors with $83 billion managed in its Pure Alpha strategy, which is closed to new investment; $57 billion in its All-Weather strategy; and $25 billion in its Optimal strategy, which combines the two approaches.

Assets managed by Bridgewater for its Chinese institutional investors could not be learned nor could the target size of its new China risk-parity fund.