China’s macro hedge funds, including Bridgewater Associates’ China business, proved more resilient than many of the country’s quantitative strategies during July’s sharp equity market selloff, according to a report by Bloomberg.
Several multi-asset managers retained positive returns for the year despite suffering losses during the month.
Bridgewater Associates, which manages more than RMB60bn ($8.9bn) in the country, saw its local All Weather Plus strategy fall 2.8% before fees in July. Despite the setback, the fund remained up about 3% for the year through 31 July, according to an investor letter.
Other macro managers also absorbed losses while preserving their annual gains. Wenjing Capital Management’s strategy was up 12% for the year after falling 4.4% in July, while the Xiaohongzhang fund managed by Hangzhou BoLiErXiang Asset Management was still ahead 10.6% year-to-date after a 1% monthly decline.
The relative resilience highlights the attraction of macro strategies that can spread exposure across equities, bonds, commodities and other asset classes when a sharp reversal in risk appetite hits stock markets.
China’s equity selloff was particularly painful for quantitative managers, whose assets had expanded rapidly during the market’s earlier rally. The country’s quant industry had grown to about RMB2.6tn yuan ($385bn) in assets this year, but many strategies suffered substantial losses in July as the artificial intelligence-led stock rally lost momentum.
Long-only quantitative strategies recorded an average 17% loss during the month, while eight of nine funds managed by DeepSeek founder Liang Wenfeng were reportedly pushed into negative territory for the year.
Data from Shenzhen-based PaiPaiWang Investment & Management showed that 309 macro hedge funds tracked by the firm lost an average 3.5% in July.
Even so, the group remained up 1.9% for 2026, while its monthly decline was less than half the roughly 7.9% fall in the CSI 300 Index. Chinese hedge funds across all strategies recorded an average 7.3% loss for the month.
The figures illustrate the defensive role macro managers seek to play during periods of market stress, although the performance of individual funds varied significantly.
Bridgewater’s China All Weather Plus strategy employs a risk-parity approach, allocating across different asset classes rather than concentrating risk in a single market.
In an investor letter, the firm said the strategy was designed to cushion sharp moves in any one asset class and had done so during July’s equity rout.
The fund generated gains from bonds during the month, while some commodities also rose amid tensions involving Iran, according to the letter.
Since its launch in July 2023, the China All Weather Plus strategy has generated an annualised return of 26.3%, with a maximum drawdown of 9.9%, the letter said.
Bridgewater’s broader results also benefited from active decision-making. Its discretionary team contributed a 2.4% gain in the second quarter, offsetting a 0.5% decline from the systematic All Weather portfolio and helping produce a combined quarterly return of 2.3%.
Wenjing Capital similarly benefited from a combination of approaches, with macro allocations contributing 3.6% during the second quarter and its quantitative segment adding another 3.5%.
The experience of more purely discretionary managers was less consistent. A balanced macro strategy run by Shanghai Banxia Investment Management gained 11% in July but remained down 14% for the year.
Shanghai Longlife Investment’s Macro Hedging No1 fund suffered an even sharper reversal, plunging 44% in July. The decline exceeded its 25% loss in March, despite the strategy having been the top-performing macro fund among those tracked by PaiPaiWang last year after gaining 153%.
