Shanghai hedge fund manager Li Bei put in her money, cranked up leverage, and produced an industry-leading 258% gain last year, according to Yahoo! Finance. Li realized that the low-volatility approach to investing was doomed in China, and steady returns did little to draw investors used to short-term rewards.
Li’s strategy was contrary to the low-volatility approach to investment that has been lauded as being behind the success of Rio Dalio’s Bridgewater Associates.
The robust performance saves Li from wounds inflicted by an exodus of investors in 2019 when her 9% return, still above 8.9% global average, was dwarfed by local mutual funds.
Li feels Chinese funds have an obvious advantage judging corporate profits and commodity prices.
While only managing about 500 million yuan or $76 million, Li says firms like hers are best placed to assess how China is driving the global economy.
Li’s use of options to construct contrarian macro trades means “her return profile is negatively correlated” with global and local peers.
Overall, Chinese macro hedge funds made an average of 41% return in 2020, four times the global level, with Li’s Banxia Stable Fund at the top of rankings.
