In absolute dollar terms, Chris Hohn’s TCI made $9.5 billion for clients last year to lead top hedge funds making a record $65.4 billion in gains. Here’s the ranking which favours the largest and the oldest funds.
The group of top 20 hedge fund firms generated $65.4 billion in after-fees gain last year, according to estimates by LCH Investments, a fund of hedge funds. Ken Griffin’s Citadel and quantitative hedge fund giant D.E. Shaw & Co. were the next most-profitable firms in terms of absolute gains in 2021. Bridgewater Associates is the most profitable hedge fund in history with net gains at $52.2 billion since its inception in 1975.
In stark contrast to the old business model-- launch a hedge fund, name it after yourself, call the shots, profit–an army of faceless suits are taking over the $4 trillion industry in a seismic and potentially permanent shift.
An Army of Faceless Suits Is Taking Over the $4 Trillion Hedge Fund World
Almost all the new money in hedge funds is going to giant multi-strategy investments. The industry’s fallen rock stars are following suit. The most successful idea in hedge funds is now simply strength in numbers.
Investors are plowing money into funds that don’t rely on the next macro genius or star stockpicker, but instead offer an army of traders who invest in an array of strategies. These behemoths secured pretty much all of the new money in the hedge fund industry last year, cementing a tectonic shift that’s accelerated since the pandemic.
That makes an awful lot of sense. Numer.ai has been discussed on the forum. It is an example of “stacking” thousands of AI programs together to make one fund.
But I think multiple individual strategies generally works better better than stacking. Stacking is pretty much universal in machine learning and is almost certainly used for some of the individual strategies of these funds also.
Now the question would be whether hedge funds use Korr’s idea of a correlation matrix or volatility matrix to weight these strategies:Correlation of Assets
Without a doubt some measure of volatility (and probably correlation) is being used.
Ken Griffin’s $43bn-in-assets Citadel made 4.7% during January’s market turmoil
2 hours ago
Ken Griffin’s Citadel made 4.7% during January’s market turmoil
Ken Griffin’s hedge fund Citadel made gains of 4.7 per cent during last month’s market turmoil, according to a person who had seen the numbers.
The gains at the firm, one of the hedge fund industry’s highest-profile players with $43bn in assets, came during a month in which the S&P 500 fell 5.3 per cent, leaving many hedge funds nursing heavy losses.
Citadel has been one of the biggest hedge fund winners during the coronavirus pandemic, gaining 26.3 per cent last year and 24.5 per cent in 2020.
Finally, when the going got tough, macro managers showed up in January — emerging as the standout winners in a month beset by turbulence across both Treasury and equity markets.
Regards
James
Bloomberg Markets
Macro Hedge Funds Top Peers in January After Years of Struggle
Ashwin Vasan’s Trend Capital was among last month’s winners
Some of the top performers wagered on faster Fed tightening
Finally, when the going got tough, macro managers showed up in January – emerging as the standout winners in a month beset by turbulence across both Treasury and equity markets.
Although many of the biggest players are coming off a decade of mostly underwhelming performance, they’ve since rejiggered their books and made money when so many others lost.
