Investing still remains one of the surest ways to build wealth and there are several investment vehicles that make this possible. In this article, we will learn about hedge funds and the top 10 hedge funds in the world.
What are Hedge funds?
Hedge funds are pooled investment funds that trade in relatively liquid assets and are able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as short selling, leverage, and derivatives.
Hedge funds are privately managed and use various strategies to produce positive, absolute returns in any market condition. They are an alternative investment with a high level of risk.
>> Learn more about Alternative Investments
Top 10 Hedge Funds in the World
| # | Hedge funds | Assets (millions USD) | Headquarters |
|---|---|---|---|
| 1. | Bridgewater Associates | $126,400 | US |
| 2. | Man Group | $73,500 | UK |
| 3. | Renaissance Technologies | $57,000 | US |
| 4. | Millennium Management | $54,968 | US |
| 5. | CITADEL | $52,970 | US |
| 6. | D.E Shaw Group | $47,861 | US |
| 7. | Two Sigma Investments | $40,969 | US |
| 8. | Davidson Kempner Capital Management | $37,450 | US |
| 9. | Farallon Capital Management | $37,400 | US |
| 10. | TCI Fund Management | $36,200 | UK |
1. Bridgewater Associates
Bridgewater Associates was founded by Ray Dalio in 1975. Worth over $140,000 AUM, the firm uses technology to guide its investment strategies. It makes investment decisions from a large-scale perspective, dealing with the market as a whole and not with individual investments.
2. Man Group
Founded by James Man in 1983, Man Group is an investment management business that offers a range of services for institutional and private investors across the globe. Through acquisitions, Man Group was able to acquire its current structure over time.
3. Renaissance Technologies
Renaissance Technologies also known as RenTech was founded in 1982 by Howard L. Morgan and Jim Simons. Using mathematical and statistical analysis, they design and execute investment strategies that provide systems to help them stay competitive in the market.
4. Millenium Management
Millenium Management was founded in 1989 by Israel Englander. It is known for employing multiple strategies in its investment plans. From low-risk investments to high-risk investments, they are able to create a balance between investments that puts them in a respected position in the market.
5. CITADEL
Founded in 1990 by Kenneth C. Griffin, CITADEL is an American investment multinational hedge fund. It is known for managing funds across five different investment strategies including equities, commodities, fixed income, quantitative strategies, and credit.
6. D.E Shaw Group
Founded in 1988 by David E. Shaw, D.E Shaw is a global investment firm. Using advanced technology for its trading strategies, it develops mathematical models that exploit anomalies in the financial market.
7. Two Sigma Investments
Based in New York City, Two Sigma Investments was founded by John Overdeck, David Siegel, and Mark Pickard in 2001. It is a hedge fund that uses technological methods such as artificial intelligence, machine learning, research, and data analysis for its trading strategies.
8. Davidson Kempner Capital Management
Davidson Kempner is a global investment management company. It was founded in 1983 by Marvin H. Davidson. Davidson Kempner focuses on fundamental investing in which it makes investment decisions based on events that might likely drive assets up or down. This strategy has helped them stay relevant in the market.
9. Farallon Capital Management
Farallon Capital Management was founded in 1986 by Tom Steyer. With approximately 230 professionals across the world, the firm uses investment strategies like credit investments, long/short equity, merger arbitrage, risk arbitrage, real estate investments, and direct investments to manage its funds.
10. TCI Fund Management
The Children’s Investment (TCI) Fund Management was founded in 2003 by Chris Hohn. Using research, it adopts a long-term investment approach to invest in strategic companies. TCI Fund Management is known for its involvement in activist investments. This has yielded high returns and has kept it in the competitive market.
What exactly does a hedge fund do?
A hedge fund pools money from private investors and institutions and uses special investment strategies to trade and make high returns on their investment.
How much money do I need to invest in a hedge fund?
Usually, many hedge funds require $1 million to start but you can look out for cheaper options with a minimum of $100,000.
Who invests in hedge funds?
Unlike other alternative investments, hedge funds are not open to everyone. Private investors, institutional investors, high-net-worth individuals, and accredited investors typically invest in hedge funds.
Are hedge funds for the rich?
Yes. Considering the profile of individuals and institutions that invest in hedge funds, the amount of money it requires, and that it is a private investment pool, it is safe to say that it is for the rich.
Bottom Line
You’ve just learned about hedge funds and the top hedge funds in the world. Investing in hedge funds requires a level of knowledge and technical know-how. Always do your research on the funds you’re considering while looking at the level of risk you can take before you go into any investment. Also, remember always to seek professional advice from your financial advisor.
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