Hedge funds are alternative investments that use a variety of methods such as leveraged derivatives, short-selling, and other speculative strategies to earn a return that outperforms the broader market. Hedge funds invest in domestic and international markets alike. They typically impose $1 million minimums and target high-net-worth individuals, pension funds, and institutional investors.
As a result, hedge funds invariably carry higher risk than traditional investments. They are not subject to the same regulations as mutual funds and may not be required to file reports with the U.S. Securities and Exchange Commission (SEC).
Below is our analysis of the 10 hedge fund firms that dominate the space, based on total assets under management (AUM) as of June 2021.
The World’s Top 10 Hedge Fund Firms
1. BlackRock Advisors
BlackRock (BLK) is a New York-based investment manager that manages trillions in assets. The largest BlackRock entity, BlackRock Fund Advisors, has been in operation since 1984 and oversees $1.9 trillion in assets.
BlackRock Financial Management was founded in 1994 and oversees $2.25 trillion. BlackRock Advisors, its internal hedge fund, started in 1994 and now handles $789.57 billion.
2. AQR Capital Management
AQR Capital Management is based in Greenwich, Conn., and uses quantitative analysis to develop financial models focused on value and momentum investing. ACR implements its strategies via mutual funds, a type of mutual offered in Europe known as Undertakings for Collective Investment in Transferable Securities, and sponsored funds and managed accounts.
As of March 31, 2020, AQR had $164billion under management. It also earned advisory feeds on another $224.8 billion in assets.
Cliff Asness founded the company along with partners John Liew, Robert Krail, and David Kabiller. The four had worked together on a hedge fund at Goldman Sachs. AQR launched its Absolute Return fund in August 1998, the same month Long Term Capital Management imploded.
3. Bridgewater Associates
Bridgewater Associates is based in Westport, Conn., and provides services to pension funds, foreign governments, central banks, university endowments, charitable foundations, and other institutional investors. Co-chair and co-chief investment officer Ray Dalio founded the firm in 1975 from his two-bedroom New York apartment.
The company offers four main funds:
- Pure Alpha, which focuses on active investment strategy
- Pure Alpha Major Markets, which targets a subset of opportunities that the Pure Alpha fund invests in
- All Weather, which uses an asset allocation strategy
- Optimal Portfolio, which combines aspects of the All Weather fund with active management
As of March 27, 2021, the fund had $154 billion under management.
4. Renaissance Technologies
Renaissance Technologies is a New York-based quantitative hedge fund that uses mathematical and statistical methods to uncover technical indicators that drive its automated trading strategies. Renaissance applies these strategies to U.S. and international equities, debt instruments, futures contracts, forward contracts and foreign exchange.
As of June 3, 2021, the fund had $130 billion under management.
Mathematician Jim Simons founded Renaissance Technologies in 1982. Forbes lists Simons as the 68th wealthiest person in the world as of Jan. 13, 2021, worth $23.5 billion. Mathematician Peter Brown is the current chief executive.
5. Man Group
This British hedge fund has more than 230 years of trading experience. It started in 1784 as an exclusive supplier of rum to the Royal Navy, later getting into the sugar, coffee and cocoa trading business.
As of December 31, 2020, Man Group had $123.6 billion in assets under management.
6. Elliott Management
Elliot Management describes its investment mandate as "extremely broad" and encompassing of almost every asset type: distressed securities, equities, hedging and arbitrage positions, commodities, real estate-related securities, etc. In August 2019, Elliot acquired book retailer Barnes & Noble.It had earlier acquired British bookseller Waterstones. The company is based in New York and was founded by Paul Singer in 1977.
As of November 13, 2020, Elliot had $73.5 billion in assets under management and $40 billion of net assets under management on a discretionary basis.
7. Two Sigma Investments
Two Sigma Investments is based in New York and was founded by John Overdeck and David Siegel in April 2002. The company uses quantitative analysis to build mathematical strategies that rely on historical price patterns and other data.
As of March 31, 2021, Two Sigma Investments had $68.9 billion under management.
8. Millennium Management
Millennium Management is based in New York and was founded in 1989. The company offers discretionary advisory services to private funds.
As of December 31, 2019, Millennium had $42 billion under management.
The company is lead by Chair Israel Englander, who founded Millennium with $35 million in capital following a career as a floor broker, trader, and options specialist on the American Stock Exchange.
9. Davidson Kempner Capital Management
Davidson Kempner Capital Management is based in New York and has affiliate offices in London, Hong Kong and Dublin. The company began managing capital for investors in 1987. It focuses on bankruptcies, convertible arbitrage, merger arbitrage, distressed investments, event-driven equities and restructuring situations.
As of May 31, 2021, Davidson Kempner had approximately $37.3 billion under management.
10. Citadel Advisors
Citadel Advisors is based in Chicago and focuses on equities, fixed income and macro, commodities, credit and quantitative strategies.
As of March 31, 2021, Citadel had $33.1 billion in assets under management.
In 1987, founder Kenneth Griffin began trading from his dorm room as a 19-year-old sophom*ore at Harvard University. He founded Citadel in 1990.
FAQs
Bridgewater Associates, the hedge fund previously run by legendary investor Ray Dalio, is the largest hedge fund in the world with more than $235 billion in assets under management. Needless to say, Bridgewater has had tremendous success since it was founded in 1975.
What is the strongest hedge fund in the world? ›
Bridgewater Associates, the hedge fund previously run by legendary investor Ray Dalio, is the largest hedge fund in the world with more than $235 billion in assets under management. Needless to say, Bridgewater has had tremendous success since it was founded in 1975.
What is the largest hedge funds in the world? ›
1. BlackRock Advisors. BlackRock (BLK) is a New York-based investment manager that manages trillions in assets. The largest BlackRock entity, BlackRock Fund Advisors, has been in operation since 1984 and oversees $1.9 trillion in assets.
Is BlackRock bigger than Bridgewater? ›
While subtle, this differentiation is most evident in the comparison between BlackRock and Bridgewater Associates. The former has a whopping AUM of $10 trillion as of January 2022, but it is primarily an asset management company. In comparison, Bridgewater, which is a hedge fund, has an AUM of $126 billion.
How much does Jim Simons make a year? ›
Jim Simons Net Worth
| Name | Jim Simons |
|---|
| Net Worth (2023) | $29 Billion |
| Profession | American mathematician |
| Monthly Income And Salary | $300 Million |
| Yearly Income And Salary | $2 Billion + |
1 more rowApr 10, 2023
Tiger Global is having a year. According to a new report from Financial Times, the low-flying-yet-seemingly-ubiquitous 21-year-old outfit has seen losses of about $17 billion during this year's tech stock sell-off. FT notes that's one of the biggest dollar declines for a hedge fund in history.
Who is the godfather of hedge funds? ›
Alfred Winslow Jones (9 September 1900 – 2 June 1989) was an Australian investor, hedge fund manager, and sociologist. He is credited with forming the first modern hedge fund and is widely regarded as the "father of the hedge fund industry."
Who is the leading US hedge fund? ›
Largest Hedge Funds Research Summary
The largest hedge fund in the U.S. is Bridgewater Associates, with an AUM of $126.4 billion. As of 2022, the U.S. hedge funds have a market size of $111.3 billion. There are at least 3,841 Hedge Funds in the U.S. U.S. hedge funds have experienced a CAGR of 8% in 2022.
What is the world's oldest hedge fund? ›
Alfred W. Jones is generally believed to have started the first hedge fund in 1949, pursuing a strategy of buying stocks and hedging the positions with short sales.
Which hedge fund lost the most money? ›
Than $200 Billion Last Year. Tiger Global and Third Point were among the biggest losers.
Citadel is now the most successful hedge fund ever after it made $16 billion last year — the biggest annual windfall on record.
Who is BlackRock biggest rival? ›
BlackRock main competitors are BNP Paribas, Credit Suisse, and Goldman Sachs. Competitor Summary. See how BlackRock compares to its main competitors: BNP Paribas has the most employees (193,000).
Who owns majority of BlackRock? ›
Laurence D. Fink is the CEO and co-founder of BlackRock. Along with seven colleagues, he started the company. As of 31 January 2023, he owned 520,126 making him the biggest individual shareholder.
Who is the boss of a $2.2 billion hedge fund? ›
Phillip Toews of $2.2 billion firm Toews Asset Management sees markets at risk of going much lower.
Who is the richest hedge fund owner? ›
Ken Griffin is the wealthiest hedge fund manager by some distance, with a net worth of $35 billion in 2023. His Citadel hedge fund management company had its best year ever in 2022, with a profit of $16 billion. This added $7.8 billion to Griffin's net wealth in a year.
Who is the best performing hedge fund manager? ›
Ken Griffin is the new hedge fund king, according to LCH Investments' annual ranking of the world's top 20 hedge fund managers, which estimates his Miami-based Citadel earned $16 billion in profits for investors last year and has posted $65.9 billion in net gains since inception in 1990.
Who was the biggest hedge fund scammer? ›
1. Madoff Investment Scandal. Madoff admitted to his sons who worked at the firm that the asset management business was fraudulent and a big lie in 2008. 2 It is estimated the fraud was around $65 billion.
Will hedge funds go extinct? ›
Hedges are not likely to go away, and it seems increasingly likely that the 1980s- and 1990s-style hedge fund management will adapt to survive more volatile times.
How many hedge funds survive? ›
Goldman, which has helped launch and finance thousands of hedge funds, said almost all newcomers survive their first year but that only 62% of all funds remain in business after five years.
Who is the smartest hedge fund manager ever? ›
James Harris Simons (born 25 April 1938) is an American mathematician, billionaire hedge fund manager, and philanthropist. He is the founder of Renaissance Technologies, a quantitative hedge fund based in East Setauket, New York.
Warren Buffett, the Oracle of Omaha, is one of the most respected investors in the world. His hedge fund, Berkshire Hathaway (NYSE: BRK. A), is known for its long-term approach to investing in high-quality companies.
What stock do most hedge funds own? ›
Hedge funds' largest allocation is to tech stocks, at nearly 21% of holdings, less than the Russell 3000's 24% weight in the sector. The biggest underweight is consumer staples, at four percentage points less than the index.
What state has the most hedge funds? ›
New York accounts for just under half of all US hedge fund industry assets (page 5); Connecticut is home to the two largest hedge fund managers in the world (page 6).
Who actually invests in hedge funds? ›
To invest in hedge funds as an individual, you must be an institutional investor, like a pension fund, or an accredited investor. Accredited investors have a net worth of at least $1 million, not including the value of their primary residence, or annual individual incomes over $200,000 ($300,000 if you're married).
What are the top 5 holdings of hedge funds? ›
Most Bought by Hedge Funds
- TSM83.19-0.25% Taiwan Semiconductor Manufacturing Company Limited.
- BAC27.04-0.35% Bank of America Corporation.
- WFC37.51-0.83% Wells Fargo & Company.
- MCO309.390.44% Moody's Corporation.
- DG216.52-0.77% Dollar General Corporation.
- URI329.80-4.28% United Rentals, Inc.
- MGM42.43-0.09% ...
- AMCR10.33-0.03%
10 Youngest Hedge Fund Billionaires and Their Top Stock Picks
- Philippe Laffont. Net Worth: $6.5 billion. Age: 54. ...
- Michael Platt. Net Worth: $15.2 billion. Age: 54. ...
- Ken Griffin. Net Worth: $27.2 billion. Age: 53. ...
- Larry Robbins. Net Worth: $1.9 billion. Advertisem*nt. ...
- John Overdeck. Net Worth: $6.5 billion. Advertisem*nt.
Great money managers are the rock stars of the financial world. While Warren Buffett is a household name to many, to stock geeks, the names of Benjamin Graham, John Templeton, and Peter Lynch are cause for extended discourses on investment philosophies and performance.
Where do the richest hedge fund managers live? ›
New York City, NY
The number one city for hedge fund jobs will come as no surprise. New York, New York has long been regarded as the financial and commercial capital of the United States. A city of over 8.3 million inhabitants, it is the home of more Fortune 500 companies than any other city in the U.S.
Who lost $20 billion in 2 days? ›
Before he lost it all—all $20 billion—Bill Hwang was the greatest trader you'd never heard of. Starting in 2013, he parlayed more than $200 million left over from his shuttered hedge fund into a mind-boggling fortune by betting on stocks.
Do rich people use hedge funds? ›
Because of this, hedge funds tend to cater to high net-worth individuals and require large sums to invest—leaving the ordinary investor out of luck. It is possible to invest in hedge funds, but there are some restrictions on the types of investors who comprise a hedge fund's investor pool.
The biggest and most obvious risk is the risk of investors losing some or all of their investment.
How many billionaires are in a hedge fund? ›
In total, Forbes counts 47 hedge fund billionaires who have a combined net worth of $312 billion, up slightly from the same number in 2022 who were worth $310 billion.
Who is bigger than BlackRock? ›
BlackRock manages nearly $10 trillion in investments. Vanguard has $8 trillion, and State Street has $4 trillion. Their combined $22 trillion in managed assets is the equivalent of more than half of the combined value of all shares for companies in the S&P 500 (about $38 trillion).
What is the richest investment fund in the world? ›
The world's largest sovereign wealth fund (SWF) as of December 2022 was China Investment Corporation (CIC), managing assets reaching around 1.35 trillion U.S. dollars. The CIC is used to manage a portion of China's foreign currency reserves and established in 2007.
What is the minimum net worth for hedge fund? ›
To invest in hedge funds as an individual, you must be an institutional investor, like a pension fund, or an accredited investor. Accredited investors have a net worth of at least $1 million, not including the value of their primary residence, or annual individual incomes over $200,000 ($300,000 if you're married).
What is the highest salary in a hedge fund? ›
The median manager earned $570 million — the fourth best in 22 years — and the seven highest earners all made at least $1 billion. The top earner was Ken Griffin, founder of multistrategy giant Citadel. He personally made $4.1 billion — the most any hedge fund manager has ever earned in the history of the Rich List.
Does BlackRock own Tesla? ›
The combined holdings of the index fund industry's three giants — BlackRock, Vanguard and State Street — make up a 13.58% stake in Tesla, it found. Vanguard funds own 6.85% of Tesla, adding up to the second-biggest shareholder, while BlackRock and State Street funds have a 3.6% and 3.13% stake, respectively.
Who really owns Vanguard Group? ›
Vanguard isn't owned by shareholders. It's owned by the people who invest in our funds. Our owners have access to personalized financial advice, high-quality investments, retirement tools, and relevant market insights that help them build a future for those they love. That's the Value of Ownership.
What two companies own the world? ›
BlackRock and Vanguard are the world's largest asset managers with a combined R309 trillion in assets under management (AUM), and they own stakes in most of the world's biggest businesses.
