Bridgewater Associates is planning to raise performance fees for its onshore funds in China after solid returns lured more assets, overcoming turmoil in the country’s 5.2 trillion yuan ($715 billion) hedge fund industry.
The firm’s Shanghai-based private fund business has told distributors its intentions to close subscriptions to existing funds and lift the fee level for new products, according to people familiar with the matter, who requested not to be named because the matter is private. The firm is planning to charge a 20% performance fee on returns in excess of 5%, compared with 10% currently, the people said. The management fee will remain unchanged, they added.
Bridgewater declined to comment via email.
The hedge fund giant is seeking to adjust its fees to levels on par with global industry norms, as it gains traction with local investors. Bridgewater boosted onshore assets under management to more than 40 billion yuan ($5.5 billion) earlier this year, more than quardruple that of global competitors including D. E. Shaw & Co. and Two Sigma Investments.
Moves to hike fees have been rare this year, as the industry is struggling to keep up with tightened supervision in China and shrinking returns. Combined assets under management for hedge funds in China fell 13% in the past year through May. Some local managers have been buying their own products or cutting fees to bolster investor confidence.
Hedge funds managing more than 10 billion yuan returned an average 2% for the first five months, according to data compiled by Shenzhen PaiPaiWang Investment & Management Co. Stock funds recorded a 1% loss for the period while multiasset funds gained 2%, the data showed.
Bridgewater’s All Weather Plus No. 3 fund returned an annualized 12.7% through the end of May since inception in 2021, according to the people. The strategy, which spreads bets on stocks, bonds and commodities, has returned 12.9% this year through May, they said.
More than 30 global firms have set up wholly owned hedge fund units in China after authorities eased rules in 2016. Bridgewater remains the only foreign one that has more than 10 billion yuan in assets.
The majority of such companies have been slow to gain clients, mostly managing less than 2 billion yuan as of March, according to PaiPaiWang. Eastspring Investments and Barings already cut jobs at the local units, Bloomberg reported in December.
