Now the Connecticut-based hedge fund giant he founded, Bridgewater Associates, is pushing back. In recent months, Bridgewater has registered several “All Weather” trademarks in China in English and Chinese, an effort to counter the “confusion” created by local copycats, said Joanna Alpert, Bridgewater China portfolio manager. Sign up now for FREE unlimited access to Reuters.com Register “We will continue to enforce our rights and protect our intellectual property,” Alpert, also a Bridgewater partner, told Reuters. “It’s a challenge out there.” Bridgewater – the world’s largest hedge fund firm with $150 billion in assets – overtook Winton and Man Group last year to become the No.1 foreign hedge fund house in the world’s second-largest economy. Its all-weather strategy, a multi-asset investment approach structured to be indifferent to changing economic conditions, has prevailed in China, where unpredictable “black swan” events such as Beijing’s tech crackdown, the Russia-Ukraine war and the COVID lockdowns roiled markets. Bridgewater launched its first onshore fund for China in 2018 and two more funds have since been established. The Chinese version of Dalio’s book, “Principles: Life and Work,” was a bestseller when it debuted in 2018. Since then, Chinese hedge fund products with “All Weather” in their names have mushroomed, with more out of 100 such products to have been registered with The China Funds Association last year alone. Bridgewater’s experiences reflect the opportunities and risks foreign consumer companies have long experienced in China’s vast market, where their brands are often copied and products imitated or revised. As China expands access to foreign asset managers, many will be watching how Bridgewater handles the situation and whether its success can be sustained as competition heats up. Shang-Jin Wei, a professor of Chinese business at Columbia Business School, said widespread use of “All Weather” products risked damaging Bridgewater’s brand if money was lost or replicator returns were bad. Although registered trademarks will help others create new products with All Weather in their name, they do not guarantee legal victories over existing products with prior use, according to Jieyuan Cai, an intellectual property attorney at YuandaWinston. And the All Weather trademark won’t stop Chinese asset managers from creating products with the same asset diversification strategy, said Liu Wencai, founder of risk management consultancy D-Union. Launched in 1996, the All Weather strategy combines different assets from stocks to bonds and commodities to be indifferent to economic conditions and provide consistent returns. But the ratio of assets, their specifics and how it plays with leverage remain Bridgewater’s secret sauce.
“OPPORTUNITY AND CHALLENGE”
A Chinese hedge fund manager, Kai Jiang, said he had read “Principles,” listened to Dalio’s speeches and studied his “All Weather” strategy before launching his own version, which was initially sold to institutional investors. In June, Jiang’s China iFund Asset Management Co began marketing the products to high-net-worth individuals through Citic Bank’s private banking division, targeting a core client base for Bridgewater in China. Between January 2019 and April 2022, one of iFund’s “All Weather” products had annualized returns of 24.5%, higher than the 18.5% annualized return of Bridgewater China’s first product, according to data released by the company. Zhan Ye, CEO of iFund, said many Chinese fund managers used “All Weather” in their product names because it is an ideal investment strategy, and “we used the name as a salute” to Dalio. Bridgewater’s All Weather was not trademarked at the time iFund’s product was named, and iFund said it would call such a strategy “Volatility Balancing” in the future. Although Bridgewater is known at the global macro level, “we are more familiar with the local market structure at the micro level, so we can generate more excess returns,” he added. Bridgewater did not comment on the matter. “We want to learn the essence, instead of being copycats.” Derek Scissors, chief economist at research firm China Beige Book International, said a brand should not be a long-term issue for funds as performance should prevail. “But if they (the challengers) have the mark and outbid the outsiders, that would be a pretty serious problem.”
STRATEGIC IMPORTANCE
For the 73-year-old Dalio, a self-proclaimed Sinophile, China has always been about more than returns or assets under management. Bridgewater said its assets under management (AUM) in China topped 10 billion yuan ($1.49 billion) last year, just 1 percent of its global business. “We never had any expectation that we would make money there (with the China-based funds) and it didn’t matter,” said a person with knowledge of Bridgewater’s business setup in the country, declining to be named. because they were not authorized to speak on the matter. Dalio’s fascination with China began with a 1984 trip to Beijing, less than a decade after he founded Bridgewater in 1975 in his New York City apartment. His frequent visits helped develop deep political ties in Beijing and an understanding of China’s growing role in the global economy. “China has always been of particular strategic importance to Bridgewater,” said Bridgewater’s Alpert. “We can’t be a good global macro investor if we don’t understand China well.” Dalio’s popularity in China is tempered by his frequent predictions of the country’s rise, citing history and the cyclical nature of empires. His personal Twitter-like Weibo account has more than 1 million fans, and in April Dalio debuted on Douyin, China’s version of TikTok, quickly attracting more than 300,000 followers. D-Union’s Liu attributes Bridgewater’s initial success in China to Dalio’s “deep” global macroeconomic research, but also to his personal brand. “In China, he promoted his books, gave speeches at various events and through social media, and gained recognition from domestic investors. This is also a key factor in his success in China,” Liu said. Analysts say those seeking to mirror Dalio’s success may struggle to emulate his political ties, including his longtime friendship with Vice Premier Wang Qishan, whom he described as a “hero” and “very high-level thinker” in his book. Dalio wrote that he took Wang’s advice to improve Bridgewater’s governance model. “Every time I talk to Wang, I feel like I’m getting closer to cracking the unifying code that unlocks the laws of the universe.” Sign up now for FREE unlimited access to Reuters.com Register Reporting by Samuel Shen in Shanghai, Carolina Mandl in New York and Rachael Levy in Washington. Edited by Sumeet Chatterjee and Lincoln Feast Our Standards: The Thomson Reuters Trust Principles. Rachel Levy Thomson Reuters Award-winning journalist covering corporate governance. Her report has sparked federal and congressional investigations and has been featured on television and podcasts. At Politico, her coverage of Covid-19 prompted the CDC to update guidelines for N95 masks and the US hospital regulator to seek patient safety complaints. A former financial reporter at the Wall Street Journal, her exposés on the Trump White House’s Kodak drug deal earned her and her colleagues a 2021 Dateline Award from the Society of Professional Journalists.
