For decades, fortunes were made on Wall St .mostly through trading stocks and bonds, and underwriting the public listings of large companies and bond issues for companies, cities, and towns. Mergers and acquisitions became part of Wall St.’s success, and that business has grown exponentially in the last several decades.
Venture capital became a road to riches for financiers in the last half-century. Some of America’s largest tech companies relied on these investments early in their histories.
Hedge funds became a relatively new source of wealth among financiers. The largest funds of the 1970s and 1980s built wealth for some of today’s billionaires. George Soros started his first head fund in 1969. Ray Dalio started Bridgewater, the world’s largest hedge fund in 1985.
Hedge funds are in the financial news regularly. However, most people do not know what they are. According to Investopedia, “Hedge funds are actively managed investment pools whose managers use a wide range of strategies, often including buying with borrowed money and trading esoteric assets, in an effort to beat average investment returns for their clients.”
Not all hedge funds and hedge fund managers employ the same strategies. They may use a wide variety of financial instruments and risk management techniques to achieve different goals, as funds may have different risk levels, acceptable volatility, and expected returns.
To find the best-performing hedge fund managers, 24/7 Wall St. reviewed Great Money Managers Research Update by LCH Investments NV, which lists estimates of net gains since inception. The criteria for inclusion include that the founder or manager should be the lead investment manager.
Among those we considered the most successful 20 funds – including Ken Griffin’s Citadel, Ray Dalio’s Bridgewater, Israel Englander’s Millennium, and Paul Singer’s Elliott Management – made $65.4 billion net of fees for their investors in 2021, accounting for 37% of the $176 billion that all hedge funds made last year.
The top 20 managers have made $677.0 billion net of fees for their investors since inception, accounting for 42.2% of the $1,604 billion in net gains hedge fund managers have made since inception. The top 20 managers managed 18.8% of the $3.57 trillion managed by the industry at the end 2021.
The best performing hedge fund of all time is Bridgewater founded by Ray Dalio. Here are the details:
> Net gains since inception: $52.20 billion
> Start year: 1975
> Net gains in 2021: $5.70 billion
> Assets under management: $99.20 billion