The Largest Hedge Funds in the World
Who are the largest hedge funds in the world? Recent market turmoil has rearranged the list, but a few top hedge fund managers with famous names like Soros, Dalio and Paulson still top the list.
Bridgewater Associates Hedge Fund
At $59 billion, Bridgewater Associates is the largest hedge fund in the world. But it wasn’t always so big. Just a brief ten years ago, it was scraping by on a relatively paltry $2 billion in assets under management, but this last decade has been one of staggering growth in AUM. How did it attract so much capital? First it performed really well. Ray Dalio got things right in 2008 and did really well when other large hedge funds stumbled. Great performance lead to a huge influx of assets and of course compound growth in AUM didn’t hurt either. Bridgewater was founded by Dalio all the way back in 1975 and it wasn’t until 1987 that is amassed $5 million in assets. From that $5 million, it took nearly 15 years for it to reach $2 billion in AUM in 2002. Then the trip from $2 billion to $59 billion took a brief 9 years. Will the Bridgewater hedge fund keep growing at an exponential rate? Only time will tell. Most of the time when hedge funds get larger their performance tends to suffer. But if anyone can beat the odds, Ray Dalio is as good of a bet of any.
JPMorgan Asset Management
The good folks at JPMorgan have $54 billion under management in their hedge fund division. This is quite a stunning figure and makes them one of the largest hedge funds on the planet. But it still pales in comparison to the size of the rest of the firm. JPMorgan has one of the biggest balance sheets in the world. It has assets of $2.3 trillion (this is trillion, not billion!) and a derivative exposure of $90 trillion. When put in this context $54 billion doesn’t seem like as big of a deal as it really is. In fact, JPMorgan’s entire asset management division oversees a total of $1.3 trillion, which is a vast sum of money.
$40.6 billion is the size of Man Investments assets under management. Man Investments is controlled by Man Group, which has quite an illustrious history. Man Group was started by a barrel maker named James Man, all the way back in 1783 so it is more than 200 years old. Back then, Man won a contract to supply the Royal Navy with rum and he made a lot of money doing this, because in those days every sailor was entitled to a ration of a half pint of rum per day. From rum, Man moved into trading and brokering commodities and then into trading financial contracts and finally into hedge funds and growing its business into one of the largest hedge funds in the world. Overall, Man has made a number of great moves in the financial markets, but one of its slipups was investing $360 million dollars of its client’s money into Bernard Madoff’s ponzi scheme/hedge fund.
Paulson & Co Hedge Fund
Paulson used to run a much larger hedge fund, but after a disastrous 2011, in which his main fund the Advantage Plus lost more than 50%, bringing his assets under management down to $36 billion and moving him lower on the list of the biggest hedge funds. Paulson’s hedge fund really shined in 2008 when his wagers against subprime paid off handsomely, though a lot of credit probably should go to Paolo Pellegrini for keying him onto this trade. But in 2011, what killed his assets under management were bad trades betting on a rebound in financial stocks, gold and of course Sino-Forest. Will the Paulson hedge fund regain spots on this list of largest hedge funds? It’s hard to tell but the odds are stacked against him. To regain its former glory after a 50% loss, his hedge fund will need to stage a 100% gain.
Brevan Howard runs $32 billion in hedge fund money, which is not bad for a firm that was started only a decade ago in 2002. In 2008, their hedge fund had a 20% return in a year when most funds were down double digits. And it staged a repeat performance in 2009 turning in an 18% return.
Soros Fund Management
Even though hedge fund manager George Soros closed his fund to outside investors he still manages a massive $28 billion in his hedge funds. So even without outside money he still has one of the largest hedge funds anywhere. Soros started Quantum Fund back in the 1970s with analyst extraordinaire and investment biker Jim Rogers. In the 70s and 80s Quantum Fund was the top performing hedge fund in the world and attracted a lot of money. It made so much money that Rogers retired from managing money and spent a number of years traveling around the world. But Soros kept on running money and virtually all of the money his firm manages is his own and that of his family.