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By Sam Jones
Gold-denominated investments in Paulson & Co, the $34bn hedge fund manager run by John Paulson, have more than doubled underlying returns in the group’s funds for clients.
More than a third of Paulson’s total assets under management, including all of Mr Paulson’s personal investments, are denominated in gold share classes, according to people familiar with the funds – a sign of concern about the risks of inflation as a result of central banks’ monetary policies.
The gold class of Mr Paulson’s Advantage fund, which manages about $7bn, is up approximately 6.7 per cent so far this year. However, the regular dollar-denominated Advantage share class is down 1.3 per cent, having lost 4.8 per cent in May.
And while dollar-denominated investments in Advantage returned 13.6 per cent in 2009, the gold share class returned 31.08 per cent, according to one investor.
The $7bn Paulson & Co Credit Opportunities fund, which returned 590 per cent in 2007 thanks to its short positions against the US subprime mortgage market, is up 5.3 per cent so far this year, while gold-denominated shares in the fund are up 13.5 per cent.
Paulson declined to comment.