Hedge fund giant Paulson suffers on economic jitters

Hedge fund manager John Paulson, who made billions out of the collapse of the sub-prime mortgage market, has been hit by the uncertainty surrounding in the US economy.

Paulson & Co, which has invested heavily in financial stocks after betting on an economic recovery, saw the value of its flagship $9bn Advantage Plus fund fall 4.26% in August, after dropping 6.6% in the second quarter, Reuters reports. Paulson's Recovery fund, which has a large weighting to financials, was also down 9.15% in August after a 12.6% Q2 drop. It is a major reversal on July, when the Advantage Plus and Recovery vehicles climbed 1.1% and 6.5% respectively. However, the hedge fund manager has profited from his bet on gold, with his Gold fund rising by 8.96% in August.