Hedge fund manager John Paulson's gold fund has lost 65 percent of its worth so far this year after the portfolio declined 23 percent last month, two people familiar with the fund said on Monday.
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 percent in the wake of fears the Federal Reserve might taper its economic stimulus by cutting monthly bond purchases. It is unclear how a 12 percent drop in the price of the precious metal translated into a 23 percent 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.
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With roughly $300 million in assets, the gold fund is the smallest portfolio in his New York-based firm's lineup with less than 2 percent 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 $700 million at the end of the first quarter, according to those people.
They did not want to be identified because the information is private.
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The gold fund, which at one point managed almost $1 billion, rose 35 percent in 2010 and contributed to Paulson's estimated $5 billion payday that year.
As the heavy losses made for outsized headlines in recent months, Paulson decided a few weeks ago to report the gold data only to the gold fund investors, not investors in his bigger and better performing funds. In April, Paulson garnered unwanted attention when the gold fund lost 27 percent as the price of the metal plunged 17 per cent over two weeks.