Market Overview

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

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

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.

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.

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

2. Michael Platt

Hedge Fund: BlueCrest Capital Management.

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

3. Raymond Dalio

Hedge Fund: Bridgewater Associates.

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

4. David Tepper

Hedge Fund: Appaloosa Management.

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

5. Kenneth Griffin

Hedge Fund: Citadel LLC.

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

Tied At No. 6: Daniel Loeb

Hedge Fund: Third Point.

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

Tied At No. 6: Paul Singer

Hedge Fund: Elliott Management.

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

Tied At No. 6: David Shaw

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

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

Tied At No. 9: John Overdeck

Hedge Fund: Two Sigma Investments.

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

Tied At No. 9: David Siegel

Hedge Fund: Two Sigma Investments.

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

11. Michael Hintze

Hedge Fund: CQS LLP.

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

Tied At No. 12: Jeffrey Talpins

Hedge Fund: Element Capital Management.

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

Tied At No. 12: Stanley 'Stan' Druckenmiller

Hedge Fund: Duquesne Family Office.

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

Tied At No. 14: Brett Icahn

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

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

Tied At No. 14: David Schechter

Hedge Fund: Icahn Capital Management.

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

Related Links:

The Program For Trading Like A Hedge Fund

A 22-Year-Old College Student In India Figured Out How To Make Quantitative Investing Models By Googling It

Posted-In: ForbesEducation Hedge Funds Top Stories Success Stories Media General Best of Benzinga


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