The World's 20 best performing hedge funds earned $65.4 billion for clients in 2021, setting a new record as stock markets marched higher despite rising prices and coronavirus cases, according to LCH Investments data.
The most successful managers earned more than a third of the $176 billion that all hedge funds made last year, said LCH Investments, a fund of funds firm that tracks returns and is part of Edmond de Rothschild group.
The top 20 investment firms TCI Fund Management and Citadel returned an average 10.5% and managed nearly one fifth of the industry's $3.6 trillion in assets, according to the data. Their returns, however, lagged broader stock market gains.
The best performers in 2021 surpassed the $63.5 billion they made in 2020 and $599.3 billion in 2019 despite the Delta and Omicron coronaviruses variants and fears that the U.S. Federal Reserve will raise interest rates to deal with spiking prices.
The top 20 managers' net gains were the highest since 2020's gains, which also set a new record, according to Rick Sopher, LCH's chairman.
In 2021, there was a shake-up among the best performers as Chris Hohn's TCI Fund Management earned $9.5 billion and Ken Griffin's Citadel made $8.2 billion for investors to rank as the top two.
The data shows that the 2020 breakout winner, Chase Coleman's Tiger Global, earned $10.4 billion in 2020, posted losses of $1.5 billion in 2021. Israel Englander's Millennium, which was ranked as the top of the list in 2020 with a $10.2 billion gain, posted a $6.4 billion gain in 2021.
Ray Dalio's Bridgewater, the world's biggest hedge fund, snapped back after a disappointing year of losses in 2020, with a $5.7 billion gain in 2021, according to the data.
Daniel Loeb's Third Point, which pursues a wide range of strategies including activist investing, broke into the top twenty in 2021 with a gain of $3.3 billion.
Representatives for the hedge funds didn't want to say anything.
Even though many firms earned billions, the stock oriented hedge funds largely lagged the broader stock market S&P 500 index's 27% gain in 2021. Sopher said that they did not fully capture the spectacular returns available in equity markets, and that their low net exposure and a difficult environment for short selling limited their returns.