Hedge fund manager John Paulson’s gold fund has lost 65 per cent of its worth so far this year after the portfolio declined 23 per cent last month, two people familiar with the fund said.
Gold had been one of the billionaire investor’s winning bets a few years ago, but not this year. His investments in gold and gold miners have suffered double digit losses for the past three months.
In June, gold tumbled 12 per cent in the wake of fears the Federal Reserve might taper its economic stimulus by cutting monthly bond purchases. It is unclear how a 12 per cent drop in the price of the precious metal translated into a 23 per cent fall in the fund in June, and whether it is the result of the bet having been leveraged up through borrowing and the use of derivatives
A spokesman for Paulson declined to comment.
With roughly US$300 million (HK$2.3 billion) in assets, the gold fund is the smallest portfolio in his New York-based firm’s lineup with less than 2 per cent of its assets and it invests mostly Paulson’s personal money, the people familiar with the fund said.
The fund’s assets have fallen from roughly US$700 million (HK$5.4 billion) at the end of the first quarter, according to those people.
They did not want to be identified because the information is private.