March 5, 2014 / 10:07 PM / 4 years ago

Bridgewater Pure Alpha fund gains in February, gold bet helps

BOSTON, March 5 (Reuters) - Bridgewater Associates’ Pure Alpha fund, one of the world’s biggest hedge funds, gained 3.04 percent last month, thanks in part to its investment in gold, which scored its biggest monthly gain in seven months.

The increase left the fund, which invests roughly $80 billion and is a favorite with pension funds and sovereign wealth funds, up 2.89 percent for the first two months of the year, according to a person familiar with the numbers.

A spokeswoman declined to comment.

Spot gold prices jumped 7 percent in February amid concerns that the U.S. economic growth is slowing.

Returns at Bridgewater - the firm also runs the $70 billion Bridgewater All Weather fund - are closely watched by the investment community because of the firm’s strong track record.

The Pure Alpha fund has returned 13.6 percent on average every year since it was launched in 1991. Last year, however, the fund’s 5.25 percent return lagged the average hedge fund’s 9.3 percent return.

Hedge funds and money managers raised their bullish bets on gold futures and options in late February, according to data from the Commodity Futures Trading Commission, after a lackluster gain in home prices fueled speculation the Federal Reserve might slow the tapering of its bullion-friendly bond purchases.

In general, February was a difficult month for so-called global macro funds that make speculative bets on economic trends. Paul Tudor Jones’ BVI Global fund dipped 0.8 percent last month, leaving it down 2.9 percent for the year, an investor in the fund said. A spokesman declined to comment.

“Conversely, global macro and (commodity trading advisers) posted mixed results - several longer-term conviction trades detracted from performance, such as long U.S. dollar and the Japan reflation,” said Anthony Lawler, a portfolio manager with GAM Alternative Investment Solutions.

But Robert Citrone, who has been running his Discovery Capital Management since 1999, came roaring back with a 3.8 percent gain, leaving the fund up 2.57 percent, a person familiar with the numbers said.

William Ackman’s $12 billion Pershing Square Capital Management also extended this year’s strong gains with a 7.4 percent increase in February, thanks to bets on mortgage finance companies Fannie Mae and Freddie Mac, an investor in the fund said. Bets on Air Products, real estate developer Howard Hughes and Burger King also helped. The fund is up 11.7 percent for the year, even as Herbalife is still weighing on performance.

Ackman claims Herbalife is running a pyramid scheme. The company denies the accusation.

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