Top global hedge funds tripled gains for clients in 2023, LCH finds

Pershing Square Holdings

22/01/2024 24:01

By Carolina Mandl and Nell Mackenzie
       NEW YORK/LONDON, Jan 22 (Reuters) - The world's 20
best-performing hedge funds generated $67 billion for investors
in 2023, roughly triple what they returned in 2022, with
activist TCI Fund Management leading the pack, according to data
published by LCH Investments on Monday. 
    Bridgewater Associates, founded by billionaire Ray Dalio,
and Caxton, were the only two firms among the 20 whose funds
posted a loss. 
    The ranking does not include all of Bridgewater's funds,
such as All Weather, which tends to follow the broader market
moves and was up 10.6% last year, a source familiar with the
matter said. 
    On average, the top 20 managers were up 10.5% last year,
while the industry overall returned 6.4%, LCH said.
    
    Billionaire Christopher Hohn's TCI led the annual ranking by
2023 returns, which were $12.9 billion after fees, while
Citadel, Millennium Management and D. E. Shaw, all
multi-strategy firms, were the top three hedge funds by lifetime
gains.
    LCH's chairman, Rick Sopher, said in an email statement
that, despite accounting for only 4.6% of the industry's assets
under management, the trio generated 38.3% of the entire
industry's returns over the past three years.
    Multi-strategy hedge funds typically use a lot of leverage
to help returns. The biggest firms are also able to pay top
dollar for the best talent, as they have a fee structure that
pays for most of their operational costs. 
    Last year's strong industry performance followed a weak
2022, when at least eight of the top 20 hedge funds lost money
on market turbulence sparked by the war in Ukraine and Federal
Reserve interest rate hikes aimed at taming inflation. 
    LCH Investments, a fund-of-funds firm that is part of the
Edmond de Rothschild Group, tracks hedge funds' annual returns
to calculate their cumulative lifetime gains - a key measure of
performance for some institutional investors. 
    Its sources include meetings with firm executives, audited
and management reports, and other sources, it says.
    Billionaire Ken Griffin's Citadel remained in pole position
in 2023, with $74 billion in gains since its creation in 1990.
Last year, Citadel's flagship fund rose 15.3% and the firm
decided to give back about $7 billion to investors.
    William Ackman's Pershing Square, an activist fund, returned
to the rankings for the first time since 2015. It stood in 20th
position for 2023, having generated $18.8 billion for investors
since 2004.
    Last year, Pershing Square returned 26.7%, beating the
broader stock market gains and bouncing back from a loss in the
previous year.     
    
          
  
    
 2022        2023        Firm        Net gains   2023 Net
 Ranking     Ranking                 since       gains ($
                                     inception   bln)
                                     ($ bln)     
 1           1           Citadel     74          8.1
 3           2           D. E. Shaw  56.1        4.2
 4           2           Millennium  56.1        5.7
 2           4           Bridgewate  55.8        (2.6)
                         r                       
 6           5           Elliott     47.6        5.5
 5           6           Soros       43.9        n/a
 14          7           TCI         41.3        12.9
 7           8           Viking      40.9        6
 8           9           Baupost     37          3.8
 9           10          Farallon    35.7        2.6
 11          11          Lone Pine   35.6        4.2
 10          12          Appaloosa   35          2.7
 12          13          Point 72    33          3
 13          14          Och         32.2        2.3
                         Ziff/Sculp              
                         tor                     
 15          15          Brevan      28.5        0.4
                         Howard                  
 16          16          Egerton     23.9        2.3
 18          17          Davidson    21          1.8
                         Kempner                 
 19          18          King        19.5        0.9
                         Street                  
 17          18          Caxton      19.5        (0.3)
 -           20          Pershing    18.8        3.5
                         Square                  
 Total                               755.4       67
 
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Global hedge funds' gains    https://reut.rs/3vIrmU5
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 (Reporting by Carolina Mandl in New York, and Nell Mackenzie in
London; editing by Michelle Price and Leslie Adler)
 ((carolina.mandl@thomsonreuters.com; +1 (917) 891-4931;))