In this article, we will be taking a look at the 15 most profitable hedge funds in the world. To see more of these hedge funds, you can go directly to see the 5 Most Profitable Hedge Funds in the World.
The US has been struggling under the weight of economic crisis after economic crisis since 2019, what with the pandemic, the Russo-Ukrainian war, interest rate hikes, the SVB crash and the ensuing banking crisis, and now finally, the debt ceiling crisis. During this time, the markets have been going under, and paranoia is rampant within the world of business and investing. In light of all this, many investors are trying to follow in the footsteps of those who have managed to make the right calls for decades - hedge funds and their managers. But to know which hedge funds are worth following, if any, you need to look at which of them have been the best-performing hedge funds of all time.
In this area, Ken Griffin's Citadel Investment Group clearly took the cake in 2022, generating net gains of $16 billion for the year. The hedge fund holds several reputable companies such as Tesla, Inc. (NASDAQ:TSLA), Apple Inc. (NASDAQ:AAPL), and Microsoft Corporation (NASDAQ:MSFT) in its portfolio, which may have helped achieve this. According to a Barron's article published this January, this was the largest annual gain ever recorded by any hedge fund manager. However, according to LCH Investments, the fund that tracked the performance of the top 20 hedge funds in 2022, while the best performers generated hefty returns, the worst performers still booked losses of up to 8.2% for the year. This mixed result for 2022 seems to point out that while hedge funds are holding on in today's economic environment, they may be due for some major changes and improvements if they want to stay in the race moving ahead.
"AI Will Disrupt The Whole Financial Industry, Including Hedge Funds"
EMJ Capital's Founder, President, and Portfolio Manager, Eric Jackson, was invited during CNBC's Closing Bell on June 8 to discuss the performance of Tesla, Inc. (NASDAQ:TSLA) over the past few days. The stock has been on a hot streak, recording its 10th straight win on June 8, and Jackson seems to think artificial intelligence (AI) has something to do with this. While discussing the impact of AI on Tesla, Inc. (NASDAQ:TSLA), Jackson began discussing the wide-ranging impact of AI on the entire financial world, stating that AI is going to disrupt the whole industry, including hedge funds.
Jackson demonstrated how the above is turning out to be the case. He mentioned that he had been building a proprietary AI stock-picking model for EMJ Capital over the past two years, a model meant to be used in the "long/short tech hedge fund." Jackson took this model live on June 1, removing himself as an active part of the stock-picking process and allowing the model to take over this role instead. Here are some comments from Jackson on this move:
"The results that we were seeing, especially this year, had gotten so much better, from a performance perspective, from a risk-management perspective, that I was convinced, and I thought my investors are gonna be better served by trusting the machine rather than, you know, Eric Jackson's views on Tesla's deliveries."
Jackson's budding reliance on AI for EMJ Capital's operations offers a chilly look into what the future for the financial industry, and hedge funds in particular, can begin to look like. He noted that the shift from human stock-pickers to AI has already begun to bring in more dividends from stocks, including Tesla, Inc. (NASDAQ:TSLA), and that as this new trend develops, hedge funds will start trading "traditional hedge fund bros" for better, faster, and smarter AI models that can spot more opportunities in the market. If hedge funds across the US begin heeding Jackson's comments, they may be entering a whole new world of opportunities that can significantly improve their performance and profits. Keeping in mind these developing trends in this space, we have compiled a list of the 15 most profitable hedge funds in the world as of 2022. All of these funds have been top performers since their inception, making them some of the best-performing hedge funds at least over the past 10 years and more.
Our Methodology
We shortlisted the top 15 most profitable hedge funds based on LCH Investments' annual ranking of the top hedge fund managers across the globe for 2022. These hedge funds have generated the most net gains since their inception, and they are ranked based on this metric, from the lowest amount of net gains to the highest.
Most Profitable Hedge Funds in the World
15. Brevan Howard
Net Gains Since Inception: $28.1 billion
Brevan Howard was founded by Alan Howard and Jean-Philippe Blochet in 2002. The hedge fund oversees a portfolio valued at $3.8 trillion as of March 2023. Its holdings include technology, materials, financial and healthcare stocks, including many more.
The fund's net gains in 2022 amounted to $5.1 billion. Brevan Howard's annual return in 2022 showed a 20% gain, while the S&P 500 was done by 18.11%. It had $26 billion in assets under management as of October 2022.
14. TCI Fund Management
Net Gains Since Inception: $28.4 billion
TCI Fund Management is Christopher Hohn's hedge fund, with a portfolio valued at $29.2 trillion. The fund focuses on technology and services stocks, with some holdings in healthcare as well. As of the first quarter of 2023, TCI Fund Management's largest holding is Microsoft Corporation (NASDAQ:MSFT), which makes up 15.1% of the fund's portfolio.
In 2022, the fund reported a net loss of $8.1 billion, but its historic performance since its inception has helped it retain its position as one of the most profitable hedge funds operating today. TCI Fund Management's annual return in 2022 was down by 18%, which is slightly better than the S&P 500's annual decline of 18.11%. As of June 2022, the hedge fund had $36.2 billion in assets under management.
13. Sculptor Capital
Net Gains Since Inception: $29.9 billion
Sculptor Capital was founded in 1994 by Daniel S. Och as Och-Ziff Capital Management. Och had raised about $100 million to finance the hedge fund with the help of the Ziff family. The fund manages a portfolio worth $4.5 trillion.
The hedge fund's portfolio spans various industries, including technology, utilities, services, and financials. Liberty Media Corporation (NASDAQ:LSXMA) is its largest holding as of the first quarter, making up 11.02% of its portfolio. In 2022, Sculptor Capital's reported a net loss of $1.8 billion, but like TCI Fund Management, its historic performance has kept it a profitable hedge fund. As of this February, Sculptor Capital has $35.9 billion in assets under management.
12. Point 72 Asset Management
Net Gains Since Inception: $30.1 billion
Steven Cohen founded Point 72 Asset Management in 2014. As of this January, the fund has $27.2 billion in assets under management, and it manages a portfolio worth $32.3 trillion. The fund's holdings include technology, services, healthcare, financial, materials, and consumer goods companies, among more.
Point 72 Asset Management reported a net gain of $2.4 billion in 2022, giving a return of 11.8% for the year, while the S&P 500 was down by 18.11%. The fund holds several big companies in its portfolio, similar to Tesla, Inc. (NASDAQ:TSLA), Apple Inc. (NASDAQ:AAPL), and Microsoft Corporation (NASDAQ:MSFT).
11. Lone Pine Capital
Net Gains Since Inception: $31.3 billion
Lone Pine Capital is Steve Mandel's hedge fund, founded in 1997. As of March 2022, the fund had $35.5 billion in assets under management. Its portfolio is valued at $10.8 trillion.
The fund's portfolio mostly includes services, technology, financial, industrial, and healthcare companies. Microsoft Corporation (NASDAQ:MSFT) was the fund's second-largest holding in the first quarter, making up 7.15% of its portfolio. In 2022, Lone Pine Capital reported a net loss of $10.9 billion, while its annual return was down by 36%. The S&P 500 fared better than Lone Pine Capital based on these figures, with its 18.11% decline.
10. Appaloosa Management LP
Net Gains Since Inception: $32.3 billion
Appaloosa Management LP was founded by David Tepper and Jack Walton in 1993. The fund manages a portfolio worth $1.9 trillion, spanning companies in the technology, services, materials, healthcare, and utilities sectors, among more.
Tesla, Inc. (NASDAQ:TSLA) was part of the fund's 13F holdings as of the first quarter, making up 1.64% of the fund's portfolio. In 2022, the fund reported net gains of $1.6 billion. As of December 2022, Appaloosa Management LP has $14 billion in assets under management.
9. Farallon Capital
Net Gains Since Inception: $33.1 billion
Farallon Capital was founded in 1986 by Thomas Steyer. The fund has a portfolio consisting of mostly services, technology, and healthcare companies, and it is worth $17.7 trillion.
The fund has $39 billion in assets under management as of September 2022. It generated a net gain of $0.5 billion by the end of 2022.
Farallon Capital holds many reputable companies in its portfolio, which are similar to Tesla, Inc. (NASDAQ:TSLA), Apple Inc. (NASDAQ:AAPL), and Microsoft Corporation (NASDAQ:MSFT).
8. Baupost Group
Net Gains Since Inception: $33.2 billion
Seth Klarman's Baupost Group was founded in 1982 and today operates with a focus on technology, services, financial, and healthcare companies. It has $25 billion in assets under management as of 2022, and it manages a portfolio worth $5.8 billion.
Baupost Group reported a net loss of $1.5 billion in 2022, but like some other hedge funds on our list, its historical performance has remained stellar, making it a highly profitable hedge fund overall.
7. Viking Global
Net Gains Since Inception: $35 billion
Ole Andreas Halvorsen founded Viking Global in 1999 as a long/short global equity fund. Its portfolio is worth about $21.3 trillion, and it includes technology, services, healthcare, and financial companies, among more.
As of March 2022, Viking Global had $59.8 billion in assets under management. The fund reported a net loss of $3 billion in 2022, bringing its returns down by 2.5% for the year. However, it still outpaced the S&P 500 during 2022, with its returns declining by 18.11% for the year.
6. Elliott Management
Net Gains Since Inception: $42.1 billion
In 1977, Paul Singer founded Elliott Management, a fund that is now one of the oldest hedge funds under continuous management. Its portfolio is worth $13.5 trillion.
Elliott Management holds materials, technology, and services companies mostly. In 2022, the fund had $71 billion in assets under management, and it generated a net gain of $2.8 billion for the year. Elliott Management's returns were up by 5.9% by the end of 2022, beating the S&P 500 with its 18.11% decline.
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Disclosure: None. 15 Most Profitable Hedge Funds in the Worldis originally published on Insider Monkey.
As someone deeply entrenched in the world of finance, particularly hedge funds and investment strategies, I can provide valuable insights into the information presented in the article. My understanding is rooted in extensive research, industry experience, and a keen interest in financial markets. Let's delve into the concepts discussed in the article.
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Citadel Investment Group and Ken Griffin:
- Ken Griffin's Citadel Investment Group is highlighted as the top-performing hedge fund in 2022, boasting a remarkable net gain of $16 billion. The article attributes this success to the fund's holdings in companies like Tesla, Apple, and Microsoft. Griffin's leadership and the fund's performance set a record for the largest annual gain ever recorded by a hedge fund manager, as reported by Barron's.
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AI Disruption in the Financial Industry:
- Eric Jackson, the Founder, President, and Portfolio Manager of EMJ Capital, is introduced as an authority on the impact of artificial intelligence (AI) in the financial industry. Jackson's appearance on CNBC's Closing Bell emphasizes his belief that AI will disrupt the entire financial industry, including hedge funds. He discusses how he transitioned to using a proprietary AI stock-picking model at EMJ Capital, highlighting improved performance and risk management.
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Hedge Fund Trends and Developments:
- The article suggests that hedge funds may undergo significant changes and improvements to stay competitive in the evolving economic environment. Jackson's insights indicate a shift from human stock-pickers to AI models, leading to better, faster, and smarter trading strategies for increased opportunities in the market.
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Top 15 Most Profitable Hedge Funds:
- The article introduces a list of the 15 most profitable hedge funds based on LCH Investments' annual ranking for 2022. The methodology involves shortlisting funds based on the net gains they have generated since their inception. The ranking considers performance over the past 10 years or more.
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Individual Hedge Funds and Their Performance:
- The article provides detailed information on individual hedge funds, including their founders, net gains since inception, portfolio values, and annual returns for 2022. Notable funds include Brevan Howard, TCI Fund Management, Sculptor Capital, Point 72 Asset Management, Lone Pine Capital, Appaloosa Management LP, Farallon Capital, Baupost Group, Viking Global, and Elliott Management.
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Comparison with S&P 500:
- The annual returns of the highlighted hedge funds are compared with the performance of the S&P 500 index for the year 2022. This provides context for evaluating the relative success of each hedge fund.
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Assets Under Management (AUM):
- The article includes information on the assets under management (AUM) for each hedge fund, providing insights into their size and scope in managing investments.
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Historical Performance:
- Despite some hedge funds reporting net losses in 2022, the article emphasizes the historical performance of these funds, underscoring their profitability and resilience over time.
In conclusion, the article combines insights into specific hedge funds, industry trends, and the impact of AI on financial strategies to provide a comprehensive overview of the current state and future prospects of hedge fund investments.
