MW These hedge-fund legends collectively beat their peers. But a simple model beat them.

By Steve Goldstein

Top 20 hedge funds of all time returned 13% last year, LCH says.

The top 20 hedge funds of all time outperformed their rivals last year. But they still trailed a simple 60/40 model that is far less expensive.

LCH Investments released its annual list of the top 20 money managers of all time, who have made $855 billion cumulatively and $94 billion last year for their investors.

These firms - led by Ken Griffin's Citadel; D.E. Shaw; and Israel Englander's Millennium - collectively generated 13.1%, outperforming the average hedge fund which scored gains of 8.1% last year, LCH said.

As good as that is, a simple 60% stocks/40% bonds model using the Vanguard total stock market fund VTI and the Vanguard total bond market fund BND would've returned just under 15% in 2024, according to the Lazy Portfolio ETF site.

   Manager                                                                                    Portfolio Manager(s)                                End-2024 AUM ($bn)  Net Gains Since Inception ($bn) to end-2024  2024 Net Gains ($bn)  Year of Inception 
   Citadel                                                                                    Ken Griffin                                         64.9                83                                           9                     1990 
   D.E. Shaw                                                                                  Various                                             41.1                67.2                                         11.1                  1988 
   Millennium                                                                                 Israel Englander                                    74                  65.5                                         9.4                   1989 
   Bridgewater                                                                                Ray Dalio                                           65.3                63.5                                         7.7                   1975 
   Elliott                                                                                    Paul Singer                                         72                  53.8                                         6.2                   1977 
   TCI                                                                                        Christopher Hohn                                    57.6                49.5                                         8.2                   2004 
   Viking                                                                                     Andreas Halvorsen                                   34.6                44.5                                         3.6                   1999 
   Soros*                                                                                     George Soros                                        n/a                 43.9                                         n/a                   1973 
   Farallon                                                                                   Tom Steyer / Andrew Spokes / Nicolas Giauque        43.4                41                                           5.3                   1987 
   Lone Pine                                                                                  Steve Mandel / David Craver, Kelly Granat           18.2                40.6                                         5                     1996 
   Baupost                                                                                    Seth Klarman                                        25.5                39.1                                         2.2                   1983 
   SAC/Point 72                                                                               Steve Cohen                                         35.2                38                                           5                     1992 
   Appaloosa                                                                                  David Tepper                                        16.3                36.9                                         1.9                   1993 
   Och Ziff/Sculptor                                                                          Daniel Och/Jimmy Levin                              29                  35.5                                         3.3                   1994 
   Brevan Howard                                                                              Alan Howard                                         34.5                30.5                                         2                     2003 
   Marshall Wace                                                                              Paul Marshall, Ian Wace                             45                  29.5                                         4.5                   1997 
   Egerton                                                                                    John Armitage                                       15.2                27.1                                         3.2                   1995 
   Davidson Kempner                                                                           Marvin Davidson, Thomas Kempner / Anthony Yoseloff  37                  24.5                                         3.5                   1983 
   Caxton                                                                                     Bruce Kovner / Andrew Law                           13.9                20.7                                         1.2                   1983 
   Pershing Square                                                                            Bill Ackman                                         17.1                20.2                                         1.4                   2004 
   TOTAL                                                                                      739.8               854.5                                        93.7 
   Source: LCH Investments estimates; * - denotes gains frozen when outside capital returned 

The giant hedge funds on the LCH list typically are now multi-manager strategies - ones where the firm divides up money across tens or hundreds of teams to produce uncorrelated returns, typically with tight risk controls and aggressive personnel management.

"The greatest gains in dollar terms were generated once again by the large firms which allocate on a multi-manager basis mainly to internal teams, Citadel, D.E. Shaw and Millennium," said Rick Sopher, chairman of LCH Investments.

Stock-market funds that were long-biased also did well in a year of strong returns for the stock market, Sopher said.

LCH also analyzed fees. It estimated that, since inception, these funds have charged investors $1.8 billion, accounting for 48% of the gross gains. Over the last two decades in particular, fees have represented 50% of gross gains, LCH said.

The two Vanguard funds each have an expense ratio of 0.03%

-Steve Goldstein

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January 20, 2025 07:57 ET (12:57 GMT)

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