Top 20 hedge funds earned most in a decade for clients last year

Despite the pandemic, the 20 best hedge funds topped their 2019 returns of US$59.3 billion. PHOTO: AFP

BOSTON (REUTERS) - The world's 20 best-performing hedge funds earned US$63.5 billion (S$84.3 billion) for clients in 2020, setting a record for the last 10 years during a chaotic time when technology oriented stocks led a dramatic rebound from a pandemic induced sell-off, LCH Investments data show.

As a group, the most successful managers earned half of the US$127 billion that all hedge funds made last year, LCH Investments, a fund of funds firm that tracks returns and is part of the Edmond de Rothschild group, reported.

Despite the pandemic that triggered a historic stock market sell-off in March, shut down large sectors of the economy and swallowed up millions of jobs, the 20 best hedge funds topped their 2019 returns of US$59.3 billion. That was despite 2020 not being as profitable as the previous year for hedge funds as a whole, which saw earnings fall from US$178 billion in 2019.

The average hedge fund returned 11.6 per cent in 2020, according to Hedge Fund Research data, lagging behind the S&P 500 index' 16 per cent gain.

"The net gains generated by the top 20 managers for their investors of US$63.5 billion were the highest in a decade. In that sense, 2020 was the year of the hedge fund," Rick Sopher, LCH's chairman, said in a statement.

Last year's biggest earners include Chase Coleman's Tiger Global, which earned US$10.4 billion, Israel Englander's Millennium, which earned US$10.2 billion and Steve Mandel's Lone Pine with US$9.1 billion. Andreas Halvorsen's Viking Global Investors earned US$7.0 billion and Ken Griffin's Citadel earned US$6.2 billion, according to LCH data.

Ray Dalio's Bridgewater Associates, founded in 1975, held on to the No.1 ranking since inception, with US$46.5 billion earned, even after a terrible 2020 during which LCH data show Dalio lost US$12.1 billion.

George Soros' Soros Fund Management, which no longer manages money for outside clients, held on to the No. 2 spot followed by Mandel, Griffin and managers at D.E. Shaw who rounded out the top five performers of all time.

In 2020 only Dalio and John Paulson's Paulson & Co., which earned billions from housing market bets during the financial crisis, lost money, the data show.

Jim Simons' Renaissance Technologies, often ranked among the world's most successful funds because of its Medallion portfolio returns, dropped out of the top 20 performers after the funds it offers to outsiders fell between 20 per cent and 30 per cent last year.

"Conditions favored man over machine and it was notable that Renaissance Technologies, a machine-driven manager, has dropped out of the top 20," Mr Sopher said.

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