Bridgewater Associates built its reputation in China on a simple and compelling promise: a multi-asset strategy designed to perform across all economic environments — growth, inflation, recession, deflation. That promise drew billions of yuan from China’s wealthiest investors, turned the firm into the leading foreign hedge fund operator in the world’s second-largest economy, and produced returns of 44.5% in 2025 alone, more than double the CSI 300’s 18% gain. Bridgewater had become, in certain circles of Shanghai finance, less a fund manager than a brand that signalled sophisticated safety.
Then the US and Israel launched airstrikes on Iran on February 28, and the promise of all-weather investing ran into weather it had not fully anticipated.
Bridgewater’s All Weather Plus strategy — its hugely popular onshore China fund — lost 5.6% between February 27 and April 3, according to net value data seen by Bloomberg. The drawdown sliced its net Q1 return to 3.9%. The firm described the performance as still above its long-term target and within expectations for a volatile quarter, which is technically accurate. But for a fund that delivered 44.5% last year and attracted investors seeking protection precisely in moments of global uncertainty, the loss cuts close to the core of its China brand proposition.
The Scope of the Damage
Bridgewater was not alone. Macro hedge funds operating in China — the segment of the industry that makes broad, economically-driven bets across equities, bonds, commodities, and currencies — suffered losses across the board as the Iran war ripped through the asset classes they were most exposed to.
The shock was not specific to China. Globally, the Iran war triggered the worst monthly drawdowns for hedge funds since January 2022, according to a Goldman Sachs note circulated to clients in early April. The hedge fund industry, which entered 2026 on the back of its best annual performance in 16 years, suddenly found itself wrong-footed almost everywhere at once.
Funds that had built positions expecting a benign macro environment — overweight equities and emerging markets, underweight the US dollar, positioned for central bank rate cuts — faced rapid unwinding as oil prices surged more than 50%, inflation expectations spiked, and the likelihood of rate cuts gave way to fears of rate hikes. The S&P 500 slid 4.63% in Q1 while the Nasdaq 100 fell 4.87%. Government bond yields rose sharply as markets repriced inflation risk. Currencies, commodities, and fixed income all moved in uncoordinated, whipsaw fashion with each new development from the Strait of Hormuz.
“March 2026 stands out as one of the more demanding months for the hedge fund industry in recent years,” said Bruno Schneller, managing partner at multi-family office Erlen Capital Management, citing elevated volatility driven by the Iran war that resulted in “rapid shifts” across currencies, commodities, equities, and interest-rate markets.
Some of the specific figures from the global macro hedge fund landscape: Said Haidar’s Jupiter Fund dropped approximately 12% in March, significantly reducing its quarterly gains. The Brevan Howard Master Fund suffered a 6.6% loss — its largest monthly drawdown in over 20 years. Taula Capital Management, the $7 billion fund run by Diego Megia, saw losses of 8.6%, deepening its year-to-date negative performance. Balyasny Asset Management was down 4.3% in March and 3.8% for the quarter. ExodusPoint saw declines of 4.5% in March.
Against that backdrop, Bridgewater’s 5.6% drawdown looks contained rather than catastrophic. A full-quarter result of 3.9% positive — in a period when many global macro funds ended the quarter in deeply negative territory — is a meaningful differentiation.
Why Macro Funds Failed as a Safe Haven
The puzzling part of March 2026 for hedge fund investors was that macro and commodities strategies — typically seen as beneficiaries of volatility and geopolitical disruption — were hit hard at precisely the moment they were supposed to provide protection. Don Steinbrugge, founder of alternative investment consultant Agecroft Partners, noted that “surprisingly, both global macro and commodity trading advisors are both doing poorly” despite the assumption that such strategies thrive when volatility increases.
The explanation lies in the nature of the shock. While oil prices surged as Hormuz shipping was disrupted, the broader market impact was simultaneously deflationary and inflationary — oil-driven price pressures rising on one side, while fears of an oil-shock-driven growth recession created pressure on equities and risk assets on the other. The spread of the impact across bonds, currencies, and equities was rapid and simultaneous, giving funds little time to reposition. Crowded trades — particularly long-growth, short-dollar bets that had performed well in 2025 — unwound simultaneously across many funds, amplifying losses through forced selling.
JPMorgan’s global markets strategy team noted that hedge funds were experiencing “their worst drawdowns since Liberation Day” — referring to the April 2025 tariff shock — and described equities as “more vulnerable than bonds from a positioning perspective,” suggesting that investors had not yet fully unwound risk exposure. For funds like Bridgewater’s All Weather Plus, which allocates across equities, bonds, and commodities, the challenge was that the war hit multiple asset classes at the same time with little correlation to normal regime patterns.
The Context of Bridgewater’s China Position
Understanding what the 5.6% loss means for Bridgewater in China requires appreciating the scale of what the firm has built there. Its onshore assets under management reached approximately RMB 60 billion by 2025, cementing its position as the largest foreign hedge fund operator in a market worth roughly RMB 7 trillion. Demand for its funds had become so intense that Chinese private banks including China Merchants Bank rationed access, requiring top clients to hold at least 10 million yuan at the firm before qualifying to invest in Bridgewater products — and even then, investors could often only purchase funds worth a tiny fraction of their bank assets.
That popularity was built on a sustained run of outperformance. Bridgewater’s All Weather Plus fund delivered positive returns every year since its onshore China launch in 2018, including 35% in 2024 and 44.5% in 2025, in markets where Chinese stocks were simultaneously struggling with property sector deflation, US-China trade tensions, and years of equity market underperformance relative to global peers. It had earned its “all weather” reputation.
The 5.6% drawdown in late February and March does not erase that track record, but it tests the narrative at a sensitive moment — particularly for an investor base that had specifically sought the fund as a hedge against exactly this kind of global disruption. Bridgewater’s response — describing the performance as within expectations and above long-term targets — is measured and technically defensible. What matters now is whether the firm’s 3.9% Q1 return holds up as a demonstration that the strategy’s framework did, in fact, deliver relative protection compared to alternatives, rather than simply suffering a milder version of the same shock that hit everyone else.
What Comes Next
The broader macro hedge fund industry faces two scenarios from here. If the Iran war de-escalates, oil prices normalise, and central banks avoid rate hikes, the funds that survived March intact will likely recover quickly — the underlying demand that made 2025 such a strong year for alternative strategies has not disappeared. There have already been early signs of ceasefire negotiations, which triggered short-covering rallies and stabilised some positions.
But if the conflict extends into the second half of 2026, keeping energy prices elevated and maintaining the stagflationary pressure that proved so difficult for macro funds to navigate in March, the industry faces a more sustained test. The Hormuz disruption is not just an oil shock — it affects fertilisers, shipping costs, LNG supply, and the broader input cost structure across global manufacturing. Each of those channels keeps the macro environment unstable and unpredictable in ways that disadvantage even the most carefully constructed multi-asset strategies.
For Bridgewater’s Chinese investors, who chose the All Weather Plus fund specifically because the world has become harder to read, the message from Q1 is that “all weather” is a description of a long-term framework, not a guarantee against short-term shocks. In a war-driven quarter, even the best-constructed diversified portfolio felt the weather.
Written by Shalin Soni, CMA specializing in financial analysis, global markets, and corporate strategy, with hands-on experience in financial planning and analytical decision-making.
ALSO READ
• The Final Countdown to Tax Day 2026: New Breaks, Big Changes, and an IRS Under Pressure
• Warren Buffett’s Most Powerful Lesson: Why the World’s Greatest Investor Says Money Isn’t the Point
• Zaslav’s $887 Million Golden Parachute Sparks Governance Concerns
Source: Based on Bloomberg and publicly available information.