China macro hedge funds weather July selloff; quants plunge

China’s macro hedge funds limited losses during July’s sharp equity selloff while many quantitative strategies posted steep declines. Bridgewater Associates’ China All Weather Plus strategy fell 2.8% in July and was about 3% higher year-to-date through July 31. Long-only quantitative strategies lost an average 17% in July.

Bridgewater manages more than RMB60 billion ($8.9 billion) in China. An investor letter reported the All Weather Plus fund generated gains from bonds in July and benefited from some rising commodity prices amid tensions involving Iran. The letter noted the strategy ‘was designed to cushion sharp moves in any one asset class.’ Since its July 2023 launch the fund has produced an annualised return of 26.3% with a maximum drawdown of 9.9%.

The firm’s discretionary team produced a 2.4% gain in the second quarter, offsetting a 0.5% decline in its systematic All Weather portfolio and producing a combined quarterly return of 2.3%.

Other multi-asset managers also limited annual losses. Wenjing Capital Management’s strategy declined 4.4% in July and remained up about 12% year-to-date. The Xiaohongzhang fund run by Hangzhou BoLiErXiang Asset Management fell 1% in July and was up 10.6% for the year.

Data from Shenzhen-based PaiPaiWang Investment & Management covering 309 macro hedge funds showed an average loss of 3.5% in July, with the group up 1.9% for 2026 through the end of the month. The average monthly decline among those macro funds was less than half the roughly 7.9% fall in the CSI 300 Index. Across all Chinese hedge fund strategies, July losses averaged about 7.3%.

Performance among discretionary macro managers varied. A balanced macro strategy run by Shanghai Banxia Investment Management gained 11% in July but was down 14% year-to-date. Shanghai Longlife Investment’s Macro Hedging No1 fund plunged 44% in July after a 25% loss in March; that strategy had gained 153% the previous year.

China’s quantitative industry expanded to about RMB2.6 trillion ($385 billion) in assets this year. Many quant models suffered when momentum faded. Long-only quant strategies recorded an average 17% loss in July. Eight of nine funds run by DeepSeek founder Liang Wenfeng were pushed into negative territory for the year.

Macro funds that shifted some exposure into bonds and certain commodities recorded smaller losses than equity-focused strategies during the month. The July results produced wide dispersion in outcomes across individual Chinese hedge funds and strategies.