The Who's Who Of Hedge Fund Managers And Traders: 15 Highest Earners

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An investment vehicle that has taken the investing world by storm, hedge funds have the exclusivity of being open only to sophisticated investors such as institutions and individuals with significant assets. Given the diversification and risk reduction opportunities these offer, there are reasons more than one to possess them as part of your investment portfolio.

Recently, Forbes published their list of 25 highest-earning hedge fund managers and traders. Based on the Forbes list, Benzinga presents the top fifteen names who are making waves in the year 2017.

Before we unveil the list for you, here are a few things an investor should be knowing about a hedge fund.

Hedge Funds Vs. Mutual Funds

Hedge funds differ from the traditional mutual funds on a few counts:

  • These funds are loosely regulated by the SEC.
  • Hedge funds usually invest in a wide range of securities ranging from stocks to bonds to commodities to real estate to risky and sophisticated investments such as derivatives.
  • These funds usually employ long-short strategies and an investment technique called leverage, whereby you invest out of borrowed capital.
  • Hedge funds are less liquid than mutual funds.
  • Usually, hedge fund managers are compensated based on a percentage of the returns they generate for the funds, whereas mutual fund managers are compensated irrespective of how the funds fare.

Strategies Adopted By Hedge Funds

  • Quantitative: These funds use statistical models and data with the aid of computer programmers to zero in on a fund that generates returns in excess of a benchmark index, with the excess termed as alpha of the fund.
  • Event-Driven: An event-driven fund looks for events that drive the markets, with some of them employing computer programs to sift through headlines and help screen opportunities.
  • Macro: These funds bet on macroeconomic trends.
  • Distressed Debt: As the name implies, the strategy envisages investing in bonds or other securities that have lost a substantial part of their value, provided the funds see opportunity for the value to improve in the futures.
  • Relative Value Arbitrage/Equity Arbitrage: Buying a pair of bonds with different maturity period or in terms of equities, going long on stock and short on another.
  • Long Only: In long only strategy, funds go long on stocks or other assets, looking to capitalize on the alpha.
  • Short Only: These funds sell stock short.
  • Long/Short: These trades are called pair-trade, where funds match stocks in the same sector. Going long on one asset and short on another.
  • Multi-strategy: These funds employ more than one strategy.
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15 Highest Earners

Here are the top hedge fund managers and traders for 2017 based on their earnings in 2016:

1. James Simons

Hedge Fund: Renaissance Technologies Corp.

2. Michael Platt

    Founded: 1982. Flagship Fund: Medallion Fund. Strategy: Quantitative. Earnings: $1.5 billion. Asset Under Management, or AUM: $36 billion.

Hedge Fund: BlueCrest Capital Management.

3. Raymond Dalio

    Founded: 2000. Strategy: Multi-strategy. Earnings: $1.5 billion.

Hedge Fund: Bridgewater Associates.

4. David Tepper

    Founded: 1975. Strategy: Macro. Earnings: $1.4 billion. AUM: $160 billion.

Hedge Fund: Appaloosa Management.

5. Kenneth Griffin

    Founded: 1993. Strategy: Distressed Debt. Earnings: $750 million. AUM: $16.5 billion.

Hedge Fund: Citadel LLC.

Tied At No. 6: Daniel Loeb

    Founded: 1990. Earnings: $500 million. AUM: $26 billion.

Hedge Fund: Third Point.

Tied At No. 6: Paul Singer

    Founded: 1995. Strategy: Event-driven. Earnings: $400 million. AUM: $15 billion.

Hedge Fund: Elliott Management.

Tied At No. 6: David Shaw

    Founded: 1977. Strategy: Distressed Assets. Earnings: $400 million. AUM: $31 billion.

Hedge Fund: D.E. Shaw & Co., L.P.

Tied At No. 9: John Overdeck

    Founded: 1988. Strategy: Multi-strategy. Earnings: $400 million. AUM: $40 billion.

Hedge Fund: Two Sigma Investments.

Tied At No. 9: David Siegel

    Founded: 2001. Strategy: Quantitative Trading. Earnings: $375 million. AUM: $40 billion.

Hedge Fund: Two Sigma Investments.

11. Michael Hintze

    Founded: 2001. Strategy: Quantitative Trading. Earnings: $375 million. AUM: $40 billion.

Hedge Fund: CQS LLP.

Tied At No. 12: Jeffrey Talpins

    Founded: 1999. Strategy: Multi-strategy. Flagship Fund: Directional Opportunities Fund. Earnings: $325 million.

Hedge Fund: Element Capital Management.

Tied At No. 12: Stanley 'Stan' Druckenmiller

    Founded: 2007. Strategy: Macro. Earnings: $300 million. AUM: $9 billion.

Hedge Fund: Duquesne Family Office.

Tied At No. 14: Brett Icahn

    Founded: 1981. Earnings: $300 million. Net worth: $4.4 billion.

Hedge Fund: Icahn Capital Management, the investment arm of Icahn Enterprises LP IEP.

Tied At No. 14: David Schechter

    Earnings: $280 million. AUM: $8 billion.

Hedge Fund: Icahn Capital Management.

    Earnings: $280 million. AUM: $8 billion.

Related Links:

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