By Carolina Mandl and Nell Mackenzie
NEW YORK/LONDON (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