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FUND TRADING HEDGE FUNDS

World's Top 10 Hedge Funds

By ANDREW BLOOMENTHAL Updated September 29, 2023

Reviewed by GORDON SCOTT

Fact checked by MICHAEL LOGAN

Six, BlackRock, one of the

largest and most diverse asset

Hedge funds are alternative investments that use various methods such as
leveraged derivatives, short-selling, and other speculative strategies to earn a
return that outperforms the broader market. Hedge funds invest in domestic
and international markets alike. They typically impose investment minimums
of hundreds of thousands of dollars to millions of dollars and target high-net-
worth individuals, pension funds, and institutional investors.

As a result, hedge funds invariably carry higher risks than traditional

investments. They are not subject to the same regulations as mutual funds and
may not be required to file reports with the U.S. Securities and Exchange
Commission (SEC). [ 1 ]

Below is our analysis of the 10 hedge fund firms that dominate the space, based
on total assets under management (AUM).

KEY TAKEAWAYS
Hedge funds are investment vehicles geared toward the wealthy.
Investors are typically high-net-worth individuals, pension funds, and
institutions.
Hedge funds employ unique investment strategies in order to
outperform the market. They charge high fees for doing so.
Hedge funds also require minimum investment amounts to participate,
often in the millions.
The largest hedge funds in the world include Citadel, Bridgewater, AQR,
and D.E. Shaw.

1. Citadel
Citadel is based in Miami and focuses on five strategies. These are (1)
commodities, (2) credit and convertibles, (3) equities, (4) global fixed income
and macro, and (5) global quantitative strategies. [ 2 ]

In 1987, founder Kenneth Griffin began trading from his dorm room as a 19-
year-old sophomore at Harvard University. He founded Citadel in 1990 and is
currently the CEO and Co-Chief Investment Officer. [ 3 ]

As of March 18, 2023, Citadel had $339 billion in assets under management. [ 4 ]

2. Bridgewater Associates
Bridgewater Associates is based in Westport, Conn., and provides services to
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pension funds, foreign governments, central banks, university endowments,
charitable foundations, and other institutional investors. Ray Dalio founded the
firm in 1975 from his two-bedroom New York apartment and now serves as
Bridgewater's CIO mentor. [ 5 ] [ 6 ] Nir Bar Dea is the firm's current chief executive
officer.

As of March 30, 2023, the firm had $196.8 billion under management. [ 5 ]

3. AQR Capital Management

AQR Capital Management is based in Greenwich, Conn., and uses quantitative
analysis to develop its strategies focused on equities and alternatives. The firm
offers its strategies via investment vehicles and registered funds. [ 7 ]

Cliff Asness founded the company along with partners John Liew, Robert Krail,
and David Kabiller. The four had worked together on a hedge fund at Goldman
Sachs. AQR launched its Absolute Return fund in 1998. [ 8 ] [ 9 ]

As of May 24, 2023, AQR had $120 billion under management. [ 10 ]

4. D.E. Shaw
D.E. Shaw was founded in New York City in 1988. The firm's founder, David E.
Shaw, received his Ph.D. from Stanford and was on the faculty of the Computer
Science Department at Columbia University before starting D.E. Shaw. While
still involved in strategic decisions, his primary role is chief scientist. [ 11 ]

The firm's systematic strategies are quant based and focus on alternative
investments and long-oriented investments. [ 12 ]

As of May 17, 2023, D.E. Shaw had $109 billion under management. [ 13 ]

3,460
The number of hedge funds in the U.S. as of 2023. [ 14 ]

5. Renaissance Technologies
Renaissance Technologies is a New York-based quantitative hedge fund that
uses mathematical and statistical methods to uncover technical indicators that
drive its automated trading strategies. Renaissance applies these strategies to
U.S. and international equities, debt instruments, futures contracts, forward
contracts, and foreign exchange.

Mathematician Jim Simons founded Renaissance Technologies in 1982. Forbes

lists Simons as the 51st wealthiest person in the world as of June 14, 2023,
worth $28.1 billion. Mathematician Peter Brown is the current chief executive.
[ ][ ][ ]
15 16 17

As of May 1, 2023, the firm had $106 billion under management. [ 18 ]

6. Two Sigma Investments

Two Sigma Investments is based in New York and was founded by John
Overdeck and David Siegel in 2001. The company uses quantitative analysis to
build mathematical strategies that rely on historical price patterns and other
data. [ 19 ]

As of March 31, 2023, Two Sigma Investments had $70.8 billion under
management. [ 20 ]

7. Elliott Investment Management

Elliot Investment Management has a multi-strategy trading approach focused
on equities, private equity, private credit, distressed securities, non-distressed,
real estate, and commodities. [ 21 ]

In Aug. 2019, Elliot acquired book retailer Barnes & Noble. It had earlier
acquired British bookseller Waterstones. The company is based in New York and
was founded by Paul Singer in 1977. [ 22 ] [ 23 ]
As of Dec. 31, 2022, Elliot had $55.2 billion in assets under management. [ 22 ]
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8. Farallon Capital Management

Farallon was established in 1986 by Thomas Steyer to invest in merger
arbitrage. Its investment strategies include credit investments, long/short
equity, merger arbitrage, risk arbitrage, real estate, and direct investments. [ 24 ]

As of May 8, 2023, Farallon had $41 billion under management. [ 25 ]

9. Ruffer Investment Company

Ruffer was founded in 1994 in the U.K. The fund employs different strategies,
including total return, diversified return, and total return international. [ 26 ] [ 27 ]

As of April 12, 2023, Ruffer had $31.6 billion under management. [ 28 ]

10. Man Group Limited

This British hedge fund manager has more than 230 years of trading experience.
It started in 1783 as a sugar cooperage, and then an exclusive supplier of rum to
the Royal Navy, later getting into the sugar, coffee, and cocoa trading business.
[ 29 ]

As of June 2, 2023, Man had $31 billion in assets under management. [ 30 ]

What Exactly Does a Hedge Fund Do?

Hedge funds pool assets from a variety of investors, primarily from institutions
and high-net-worth individuals. These assets are then invested using
proprietary trading methods that the hedge funds come up with to significantly
outperform the market. Hedge funds do not use standard trading strategies but
rather seek to actively manage their assets to provide extraordinary returns to
their investors.

How Rich Do You Have to Be to Invest in a Hedge Fund?

Hedge funds are typically only open to accredited investors, which the
Securities and Exchange Commission defines as those with a net worth of $1
million or more, not including your primary residence, and having an income of
at least $200,000 as an individual or $300,000 with a spouse in each of the prior
two years. [ 31 ]

Why Are Hedge Funds So Rich?

Hedge funds are rich because they are geared to high-paying investors, so the
amount of money they have to invest is very large. Additionally, hedge funds
employ many strategies that are unique and actively managed to beat the
market, so their returns are often very high.

The Bottom Line

Hedge funds seek to employ unique strategies with the goal of providing greater
returns than the market or standard investment strategies. Hedge funds come
up with unique ideas to employ in the markets and charge a high price for doing
so.

They're not created for the average investor but rather geared toward
institutions and high-net-worth individuals, as many hedge funds come with
minimum investment amounts, which can often be in the millions. As such,
these firms command billions of trading assets.

Correction—July 27, 2023: A previous version of this article incorrectly named

the #1 hedge fund as Citadel Advisors and listed its base of operations as
Chicago. The company's name is just Citadel, and it is based in Miami.

ARTICLE SOURCES

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