What Are the Top Ten Hedge Funds?
Hedge funds are one of the fastest-growing asset management tools in the world. From a small base in the early 1960s, they have grown to be a multi-trillion-dollar asset class with an outsized influence on the world. These funds employ a variety of trading and investment strategies. Some have grown to be much larger than their peers.
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Top Hedge Funds
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The most effective way to measure top hedge funds is by assets under management. This is a helpful tool for determining their influence (since bigger funds make bigger trades) and their headcount (since more money means more people to manage it). It is also a good way to roughly measure their returns. Many large funds have grown by growing their existing investor assets. They have also grown by attracting new investors through high average returns in the past.
Large Macro Funds
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One of the most common categories of hedge fund is the "global macro" fund, which bets on global changes in currencies and interest rates. Large funds in this category include Bridgewater Associates (the largest hedge fund), Paulson & Co., and Soros Fund Management. Paulson & Co. in particular has grown in recent years, due to successful investments in the US housing market. Bridgewater and Soros are both long-established firms that have accumulated money over the past several decades.
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Large Value Funds
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Value investors seek to profit from company fundamentals. These investors pick stocks, bonds and other investment products on the basis of getting a good business value out of their investment. Large value funds include Baupost Group, Angelo Gordon & Co., Farallon Capital Management, and King Street Capital Management. Many of these funds help invest in distressed debt (the debt of bankrupt companies), so they often play a management role as well. These funds have generally grown over time.
Other Funds
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Some funds use a wide variety of strategies to earn high returns. These funds may use a combination of macro strategies and fundamental strategies, and may also use quantitative techniques. Quantitative investment generally involves analyzing massive amounts of data to find patterns, and then trading off of those patterns. Such funds include JP Morgan Asset Management, Och-Ziff Capital Management, and BlackRock. These funds can grow because their approach of using multiple strategies reduces the odds of a bad year. However, it reduces the odds of extraordinary returns as well.
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