According to recent analysis, hedge funds experienced a significant increase in profits last year, thanks to a rebound in stock markets.
According to research conducted by LCH Investments, a fund of hedge funds, the top 20 hedge funds generated $67 billion in profits for investors in 2023. This is an increase from the $65 billion earned during the pandemic-era rally of 2021 and nearly triple the $22.4 billion earned in 2022 by fund managers.
According to estimates from LCH Investments, the hedge fund industry experienced a total gain of $218 billion after taking into account fees.
Last year, the hedge funds that had achieved the highest returns in terms of dollars since their establishment made up approximately one-third of the total annual profits. Surprisingly, these top-performing funds managed less than 19% of the overall assets in the hedge fund industry.
Some of the top-performing hedge funds included TCI, Citadel, and Viking, managed by Christopher Hohn, Ken Griffin, and Andreas Halvorsen respectively.
Top 20 Managers by 2023 Profits
| FIRM | Assets (billion) | Net profits since inception (billion) | 2023 profits (billion) | Launch year |
| TCI | $50 | $41.3 | $12.9 | 2004 |
| CITADEL | $56.8 | $74 | $8.1 | 1990 |
| VIKING | $30.5 | $40.9 | $6 | 1999 |
| MILLENNIUM | $61.9 | $56.1 | $5.7 | 1989 |
| ELLIOTT | $62.2 | $47.6 | $5.5 | 1977 |
| DE SHAW | $43.8 | $56.1 | $4.2 | 1988 |
| LONE PINE | $15.9 | $35.6 | $4.2 | 1996 |
| BAUPOST | $27.4 | $37 | $3.8 | 1983 |
| PERSHING SQUARE | $17.9 | $18.8 | $3.5 | 2004 |
| SAC/POINT72 | $31 | $33 | $3 | 1992 |
| APPALOOSA | $17 | $35 | $2.7 | 1993 |
| FARALLON | $40.4 | $35.7 | $2.6 | 1987 |
| OCH ZIFF/SCULPTOR | $28.7 | $32.2 | $2.3 | 1994 |
| EGERTON | $14 | $23.9 | $2.3 | 1995 |
| DAVID KEMPNER | $37 | $21 | $1.8 | 1983 |
| KING STREET | $9.5 | $19.5 | $0.9 | 1995 |
| BREVAN HOWARD | $35.6 | $28.5 | $0.4 | 2003 |
| CAXTON | $13.4 | $19.5 | $-0.3 | 1983 |
| BRIDGEWATER | $72.5 | $55.8 | $-2.6 | 1975 |
| SOROS | N/A | $43.9 | N/A | 1973 |
According to Brad Amiee, the director and head of research at LCH Investments, hedge funds performed well due to the impressive performance of the stock market in 2023. He also mentioned that many hedge funds demonstrated exceptional skills in selecting stocks.
According to Amiee, it can be argued that focusing on long positions and maintaining a concentrated portfolio of high-quality positions has been a more favorable approach, considering the difficulties associated with shorting as a sub-strategy. This statement was made in an interview with the Financial Times.
TCI, the top ranking fund, recorded investor profits of $12.9 billion and ended last year up 33%, beating the S&P 500′s 24% gain.
Included in its largest holdings were Alphabet, Canadian National Railway, Visa and General Electric.
In the year 2023, Citadel secured the second position, generating a remarkable profit of $8.1 billion. This achievement was preceded by an impressive influx of $16 billion in 2022. With a total gain of $74 billion since its establishment, Citadel stands out as the most prosperous hedge fund ever.
According to the study, the leading 20 hedge funds have generated a total profit of $755.4 billion since their establishment. This figure surpasses the total managed assets of $655.5 billion.
Hedge funds are investment vehicles that pool together funds from private investors who entrust their money to professional fund managers. Unlike mutual funds, hedge funds are known for their inclination towards higher-risk and unconventional assets.