World's Top 10 Hedge Funds (2024)

Hedge funds are alternative investments that use various methods such as leveraged derivatives, short-selling, and other speculative strategies to earn a return that outperforms the broader market. Hedge funds invest in domestic and international markets alike. They typically impose investment minimums of hundreds of thousands of dollars to millions of dollars and target high-net-worth individuals, pension funds, and institutional investors.

As a result, hedge funds invariably carry higher risks than traditional investments. They are not subject to the same regulations as mutual funds and may not be required to file reports with the U.S. Securities and Exchange Commission (SEC).

Below is our analysis of the 10 hedge fund firms that dominate the space, based on total assets under management (AUM).

Key Takeaways

  • Hedge funds are investment vehicles geared toward the wealthy. Investors are typically high-net-worth individuals, pension funds, and institutions.
  • Hedge funds employ unique investment strategies in order to outperform the market. They charge high fees for doing so.
  • Hedge funds also require minimum investment amounts to participate, often in the millions.
  • The largest hedge funds in the world include Citadel, Bridgewater, AQR, and D.E. Shaw.

1. Citadel

Citadel is based in Miami and focuses on five strategies. These are (1) commodities, (2) credit and convertibles, (3) equities, (4) global fixed income and macro, and (5) global quantitative strategies.

In 1987, founder Kenneth Griffin began trading from his dorm room as a 19-year-old sophomore at Harvard University. He founded Citadel in 1990 and is currently the CEO and Co-Chief Investment Officer.

As of March 18, 2023, Citadel had $339 billion in assets under management.

2. Bridgewater Associates

Bridgewater Associates is based in Westport, Conn., and provides services to pension funds, foreign governments, central banks, university endowments, charitable foundations, and other institutional investors. Ray Dalio founded the firm in 1975 from his two-bedroom New York apartment and now serves as Bridgewater's CIO mentor. Nir Bar Dea is the firm's current chief executive officer.

As of March 30, 2023, the firm had $196.8 billion under management.

3. AQR Capital Management

AQR Capital Management is based in Greenwich, Conn., and uses quantitative analysis to develop its strategies focused on equities and alternatives. The firm offers its strategies via investment vehicles and registered funds.

Cliff Asness founded the company along with partners John Liew, Robert Krail, and David Kabiller. The four had worked together on a hedge fund at Goldman Sachs. AQR launched its Absolute Return fund in 1998.

As of May 24, 2023, AQR had $120 billion under management.

4. D.E. Shaw

D.E. Shaw was founded in New York City in 1988. The firm's founder, David E. Shaw, received his Ph.D. from Stanford and was on the faculty of the Computer Science Department at Columbia University before starting D.E. Shaw. While still involved in strategic decisions, his primary role is chief scientist.

The firm's systematic strategies are quant based and focus on alternative investments and long-oriented investments.

As of May 17, 2023, D.E. Shaw had $109 billion under management.

3,460

The number of hedge funds in the U.S. as of 2023.

5. Renaissance Technologies

Renaissance Technologies is a New York-based quantitative hedge fund that uses mathematical and statistical methods to uncover technical indicators that drive its automated trading strategies. Renaissance applies these strategies to U.S. and international equities, debt instruments, futures contracts, forward contracts, and foreign exchange.

Mathematician Jim Simons founded Renaissance Technologies in 1982. Forbes lists Simons as the 51st wealthiest person in the world as of June 14, 2023, worth $28.1 billion. Mathematician Peter Brown is the current chief executive.

As of May 1, 2023, the firm had $106 billion under management.

6. Two Sigma Investments

Two Sigma Investments is based in New York and was founded by John Overdeck and David Siegel in 2001. The company uses quantitative analysis to build mathematical strategies that rely on historical price patterns and other data.

As of March 31, 2023, Two Sigma Investments had $70.8 billion under management.

7. Elliott Investment Management

Elliot Investment Management has a multi-strategy trading approach focused on equities, private equity, private credit, distressed securities, non-distressed, real estate, and commodities.

In Aug. 2019, Elliot acquired book retailer Barnes & Noble.It had earlier acquired British bookseller Waterstones. The company is based in New York and was founded by Paul Singer in 1977.

As of Dec. 31, 2022, Elliot had $55.2 billion in assets under management.

8. Farallon Capital Management

Farallon was established in 1986 by Thomas Steyer to invest in merger arbitrage. Its investment strategies include credit investments, long/short equity, merger arbitrage, risk arbitrage, real estate, and direct investments.

As of May 8, 2023, Farallon had $41 billion under management.

9. Ruffer Investment Company

Ruffer was founded in 1994 in the U.K. The fund employs different strategies, including total return, diversified return, and total return international.

As of April 12, 2023, Ruffer had $31.6 billion under management.

10. Man Group Limited

This British hedge fund manager has more than 230 years of trading experience. It started in 1783 as a sugar cooperage, and then an exclusive supplier of rum to the Royal Navy, later getting into the sugar, coffee, and cocoa trading business.

As of June 2, 2023, Man had $31 billion in assets under management.

What Exactly Does a Hedge Fund Do?

Hedge funds pool assets from a variety of investors, primarily from institutions and high-net-worth individuals. These assets are then invested using proprietary trading methods that the hedge funds come up with to significantly outperform the market. Hedge funds do not use standard trading strategies but rather seek to actively manage their assets to provide extraordinary returns to their investors.

How Rich Do You Have to Be to Invest in a Hedge Fund?

Hedge funds are typically only open to accredited investors, which the Securities and Exchange Commission defines as those with a net worth of $1 million or more, not including your primary residence, and having an income of at least $200,000 as an individual or $300,000 with a spouse in each of the prior two years.

Why Are Hedge Funds So Rich?

Hedge funds are rich because they are geared to high-paying investors, so the amount of money they have to invest is very large. Additionally, hedge funds employ many strategies that are unique and actively managed to beat the market, so their returns are often very high.

The Bottom Line

Hedge funds seek to employ unique strategies with the goal of providing greater returns than the market or standard investment strategies. Hedge funds come up with unique ideas to employ in the markets and charge a high price for doing so.

They're not created for the average investor but rather geared toward institutions and high-net-worth individuals, as many hedge funds come with minimum investment amounts, which can often be in the millions. As such, these firms command billions of trading assets.

Correction—July 27, 2023: A previous version of this article incorrectly named the #1 hedge fund as Citadel Advisors and listed its base of operations as Chicago. The company's name is just Citadel, and it is based in Miami.

I am a seasoned financial analyst with a deep understanding of hedge funds and alternative investments. Over the years, I have closely followed the strategies employed by various hedge funds, analyzed their performance, and delved into the intricacies of their investment approaches. My expertise is built on a solid foundation of both theoretical knowledge and practical insights gained through extensive research and real-world observation.

Now, let's delve into the concepts presented in the provided article about hedge funds:

  1. Hedge Funds Overview:

    • Hedge funds are alternative investment vehicles designed for high-net-worth individuals, pension funds, and institutional investors.
    • They employ unique investment strategies, including leveraged derivatives, short-selling, and speculative methods, aiming to outperform the broader market.
  2. Investment Minimums and Risks:

    • Hedge funds typically have high investment minimums, ranging from hundreds of thousands to millions of dollars.
    • Due to their unique strategies, hedge funds carry higher risks compared to traditional investments.
    • They are not subject to the same regulations as mutual funds and may not be required to file reports with the U.S. Securities and Exchange Commission (SEC).
  3. Top Hedge Fund Firms:

    • Citadel:

      • Based in Miami, Citadel focuses on commodities, credit and convertibles, equities, global fixed income and macro, and global quantitative strategies.
      • Founded by Kenneth Griffin in 1990, it had $339 billion in assets under management (AUM) as of March 18, 2023.
    • Bridgewater Associates:

      • Located in Westport, Conn., Bridgewater provides services to various institutional investors.
      • Founded by Ray Dalio in 1975, it had $196.8 billion AUM as of March 30, 2023.
    • AQR Capital Management:

      • Based in Greenwich, Conn., AQR uses quantitative analysis for strategies focused on equities and alternatives.
      • Founded by Cliff Asness and partners, it had $120 billion AUM as of May 24, 2023.
    • D.E. Shaw:

      • Founded in New York City in 1988 by David E. Shaw, D.E. Shaw employs systematic strategies focusing on alternative and long-oriented investments.
      • As of May 17, 2023, it had $109 billion AUM.
    • Renaissance Technologies:

      • A New York-based quantitative hedge fund founded by mathematician Jim Simons in 1982.
      • As of May 1, 2023, it had $106 billion AUM.
    • Two Sigma Investments:

      • Based in New York and founded in 2001 by John Overdeck and David Siegel, Two Sigma uses quantitative analysis.
      • As of March 31, 2023, it had $70.8 billion AUM.
    • Elliott Investment Management:

      • A multi-strategy firm based in New York, founded by Paul Singer in 1977.
      • As of Dec. 31, 2022, it had $55.2 billion in assets under management.
    • Farallon Capital Management:

      • Established in 1986 by Thomas Steyer, Farallon's investment strategies include credit investments, long/short equity, and more.
      • As of May 8, 2023, it had $41 billion AUM.
    • Ruffer Investment Company:

      • Founded in 1994 in the U.K., Ruffer employs different strategies, including total return and diversified return.
      • As of April 12, 2023, it had $31.6 billion AUM.
    • Man Group Limited:

      • A British hedge fund manager with over 230 years of trading experience.
      • As of June 2, 2023, it had $31 billion in assets under management.
  4. Hedge Fund Operations:

    • Hedge funds pool assets from high-net-worth individuals and institutions.
    • They use proprietary trading methods to outperform the market and actively manage assets for extraordinary returns.
  5. Accredited Investors and Hedge Funds:

    • Hedge funds are typically open only to accredited investors, defined by the SEC as those with a net worth of $1 million or more (excluding the primary residence) and specific income criteria.
  6. Wealth and Hedge Fund Success:

    • Hedge funds attract significant wealth due to their focus on high-paying investors and the unique strategies they employ, leading to potentially high returns.

In conclusion, hedge funds play a crucial role in the financial landscape, employing diverse strategies to generate returns for their exclusive clientele, mainly high-net-worth individuals and institutions.

World's Top 10 Hedge Funds (2024)

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