Bridgewater's China fund up 19% in September amid stock rally

By Summer Zhen

HONG KONG (Reuters) - Hedge fund giant Bridgewater Associates' onshore China funds in September posted their best monthly gain since launch, boosted by an epic stock rally after Beijing's policy shift to revive the economy, data in an investor letter showed.

Bridgewater China's yuan-denominated All Weather Plus No.5 fund jumped 19% last month, bringing its return this year through September to 31%, before fees, according to an investor letter seen by Reuters.

Other All Weather Plus Funds delivered similar returns last month, according to investors.

Bridgewater declined to comment.

Founded by long-time China bull Ray Dalio, the world's largest hedge fund launched its first China fund in 2018 and has tripled its assets under management in mainland China to 40 billion yuan ($5.62 billion) over the past three years.

Its returns outpaced an average 6.6% gain for September and 1.6% for the first nine months among local multi-asset funds, data from Shenzhen PaiPaiWang Investment & Management showed.

Its September performance was mainly driven by its equity and bond positions, the fund said in its latest investor letter. Returns from commodities were flat.

China's blue-chip CSI300 Index jumped 21% for its best month since December 2014 after the government unveiled an aggressive stimulus package in late September to pull economic growth back towards its roughly 5% target for this year.

However, Chinese government bonds had a volatile month. The 10-year yield fell to record lows before the policy bonanza sparked a sharp rise.

Compared to previous easing policies, the stimulus measures this time, which included lower home loan rates and cuts in bank reserve requirements, showed "a significant difference," the investor letter said, referring to the scale and intensity.

But more forceful and active stimulus policies are needed, particularly on the fiscal side, to achieve a sustained economic recovery, the fund said in the letter.

Bridgewater said it is bullish on Chinese equities, short-term and long-term Chinese debt on policy easing expectations, while it is neutral on commodities as demand from the shift to renewable energy is offset by weak construction activity.

($1 = 7.1200 Chinese yuan renminbi)

(Reporting by Summer Zhen; Editing by Sonali Paul)