Billionaire John Paulson, the hedge- fund manager trying to recover from losses related to bullion this year, posted a 13 percent decline in his Gold Fund last month, according to a letter to investors.
The drop brings losses in the strategy to 54 percent since the start of the year, the firm said in the letter, a copy of which was obtained by Bloomberg News. The Gold Fund is the smallest strategy of the $19 billion money manager, with about $360 million, or 2 percent of assets, most of it Paulson’s own money.
The firm said it has no intention of closing down the Gold Fund and recommended investors stay invested as valuations provide a “significant upside.” Paulson & Co. last week told clients it would start reporting returns for the Gold Fund and the gold share classes of other strategies separately to avoid taking away attention from positive performance in other strategies, according to a person familiar with the matter.
Paulson & Co. will change the Paulson Gold Funds’ name to the PFR Gold Funds, which stands for the initials of Paulson and gold specialists Victor Flores and John Reade, according to the letter.
Gold fell 5.4 percent and gold equities declined 3 percent in May on speculation the Federal Reserve will scale back its bond purchases, reducing the attractiveness of bullion and related securities as a hedge against inflation.
The New York-based firm posted gains in the dollar share classes of its four main strategies last month and since the start of the year. The firm’s Credit Opportunities Fund, its largest strategy, is up 16 percent this year, and Paulson Partners rose 8.5 percent, Advantage Plus climbed 7 percent and the Recovery Fund surged 28 percent.
Investors can choose between dollar- and gold-denominated share classes of most of Paulson’s funds.
Armel Leslie, a spokesman for Paulson & Co. at Walek & Associates, declined to comment on the letter.