Hedge Funds Accumulate $178 Billion in 2019
In the best year in about 10 years the 20 best-performing hedge fund managers gained an incredible $59.3 billion in 2019. TCI manager Christopher Hohn led his fund to a $8.4 billion, the largest among the group of 20. Steve Mandel, manager of Lone Pine, took 2nd with a $7.3 billion gain. The 20 best-performers captured about 1/3 of the $178 billion taken in by hedge funds in 2019.
The hedge fund sector as a whole did not do well notching a 9% gain in 2019 compared to the 29% gain for the S&P 500 through the year.
Last year's gains mark "a significant improvement after several years of muted returns," LCH chairman Rick Sopher told the Financial Times. The top 20 managers still posted moderate gains in 2018, though the hedge fund industry lost $41 billion of investor capital as it moved into venture and private equity funds.
Some people believe that the hedged part of the hedge fund is to be blamed for the muted returns even though that is the point of a hedge fund. Hedge funds are there to make money by mitigating risk and finding companies that look like attractive investments, but using different means and methods to help protect the initial capital.
Ray Dalio's Bridgewater remained at the top spot despite its meager $600 million gain through the year. The fund holds $131.9 billion in assets under management which is more than the next four combined.
The biggest jump among funds included in the list across both years.
The hedge fund sector continued to shrink. The industry saw more closures than openings for the fifth year in a row in 2019 as lofty fees and soaring stocks drove investors to other vehicles. However, if you remember leading up to and especially during the financial crisis the same things were happening to hedge funds. Major players including David Tepper's Appaloosa and Louis Bacon's Moore Capital converted into family offices in 2019.