Top Hedge Funds Return Record $65.4 Billion to Clients in 2021

© Reuters. FILE PHOTO: Citadel Founder and CEO Ken Griffin speaks during the Milken Institute’s 22nd annual global conference in Beverly Hills, California, U.S. April 30, 2019. REUTERS/Mike Blake/File Photo

By Svea Herbst-Bayliss

BOSTON (Reuters) – The world’s 20 best-performing hedge funds earned $65.4 billion from clients in 2021, setting a new record as stock markets rose despite rising prices and coronavirus cases, according to data from LCH Investments.

As a group, top-performing managers earned more than a third of the $176 billion that all hedge funds made last year, reported LCH Investments, a fund-of-funds company that tracks returns and is part of the Edmond de Rothschild group.

The top 20, including branded investment firms TCI Fund Management and Citadel, returned an average of 10.5% and jointly managed nearly a fifth of the industry’s $3.6 trillion in assets, according to the data. Their returns, however, lagged broader stock market gains.

Top performers in 2021 surpassed the $63.5 billion they earned in 2020 and $59.3 billion in 2019, despite Delta and Omicron coronavirus variants and fears that the US Federal Reserve will soon have to raise interest rates to combat soaring prices.

“The net earnings generated by the top 20 managers for their investors … were the highest ever,” surpassing 2020 earnings which also set a record, said Rick Sopher, president of LCH.

There was a shake-up among the top performers in 2021 as Chris Hohn’s TCI Fund Management gained $9.5 billion and Ken Griffin’s Citadel gained $8.2 billion to put investors in the top two first.

2020 winner Chase Coleman’s Tiger Global, which earned $10.4 billion in 2020, posted losses of $1.5 billion in 2021, the data shows. Israel Englander’s Millennium, which also topped the list in 2020 with a $10.2 billion earning, recorded a $6.4 billion earning in 2021.

Ray Dalio’s Bridgewater, the world’s largest hedge fund, rebounded from a disappointing year of losses in 2020 with a $5.7 billion gain in 2021, the data showed.

Daniel Loeb’s Third Point, which pursues a range of strategies including activist investing, broke into the top twenty in 2021 with a $3.3 billion gain.

Hedge fund representatives declined to comment.

Even though many companies have made billions, equity-focused hedge funds have lagged far behind the general stock market’s 27% gain in 2021. They “have generally not fully captured the spectacular returns available in equity markets,” Sopher said, adding “their low net exposure and a difficult short-selling environment has limited their returns.”

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