The stock market year 2022 was a year to forget for most investors. Yet some hedge fund managers have taken home billions.
Hedge funds are an industry that is shrouded in mystery because it lacks transparency. Many rumors surround the mostly publicly shy investment gurus. Some reverently call the star hedge fund managers “Masters of the Universe”, others derogatory “locusts”.
For most investors, however, hedge funds are out of reach because they are aimed at institutional investors or wealthy individuals who can raise the often six- or even seven-figure minimum amounts for the initial investment.
In any case, the investment professionals hardly leave any market observer indifferent, and when most people think of hedge funds, they probably first think of fabulous wealth and luxury. In fact, hedge fund managers are among the top earners in the world‘s leading financial center, Wall Street. They earn far more than traditional fund managers.
play with risk
The gap is largely related to the amount of assets under management (AUM) of hedge funds and how hedge fund managers charge for the AUM. The main difference between hedge funds and traditional mutual funds is risk. Due to the high leverage, these investment vehicles can achieve incredible profits, but also suffer very high losses.
The horror year 2022 was also a pitch-black year for a number of hedge fund managers. For many, however, it was the best year in a long time, they made billions in personal profits and were able to pop the champagne corks, like the magazine’s “Rich List”. «Institutional Investor» shows (Item subject to a charge).
An excellent vintage
2022 has been a very good year for multi-strategy, macro, trend-following and fixed income managers. Pros in these investing styles dominate the ranking of the top 25 earning hedge fund managers based on a combination of fee income and returns on equity.
Overall, the top 25 earned $21.5 billion last year, the third-highest total after 2020 and 2021. That’s an average of about $860 million per capita. The median is a “mere” $570 million – the fourth-best result in 22 years. The top seven earners all raked in at least $1 billion.
As much as never before
was top earner Ken Griffin, founder of multi-strategy giant Citadel. He personally earned $4.1 billion. Never in the 22-year history of the “Rich List” has a hedge fund manager raked in such a high income. Citadel’s flagship fund, Wellington, is up more than 38 percent over the past year. Firm-wide assets under management rose to $53.7 billion.
Griffin is followed by his archrival, the multi-strategist Israel «Izzy» Englander by Millennium Management. He was able to put $3.2 billion in the private coffers. Englander’s fund rose 12.4 percent last year. The 53-year-old Wall Street veteran’s firm manages $58.6 billion. Overall, Englander has earned more than $10 billion over the past three years.
In third place, “Institutional Investor” leads the owner of the US baseball team New York Mets. Steven Cohen by Point 72 Asset Management brought home $1.9 billion. Its multi-strategy fund is up nearly 10.3 percent over the past year, while Point 72 has returned $2.4 billion to investors.