The 2016 Rich List of the World's Top-Earning Hedge Fund Managers

May 10, 2016   Stephen Taub


Citadel's Kenneth Griffin tops the list for the second straight year, though he shares the No. 1 spot with Renaissance Technologies founder James Simons in our annual ranking of the world's highest-earning hedge fund managers.

Related Content
 

At a conference a year ago, David Siegel, co-­chairman of quantitative hedge fund firm Two Sigma and an artificial-intelligence expert, predicted that computer-driven managers will one day rule the markets. "The challenge facing the investment world is that the human mind has not become any better than it was 100 years ago, and it's very hard for someone using traditional methods to juggle all the information of the global economy in their head," he said. "Eventually, the time will come that no human investment manager will be able to beat the computer."

Apparently, Siegel's future has already become a reality. This year about half of the 25 highest-earning hedge fund managers topping Alpha's 15th annual Rich List used computer-­generated investing strategies to produce all or some of their investment gains. They include Siegel and John Overdeck, his Two Sigma co-chairman and co-founder, who qualify for the Rich List for the first time. They tie for seventh place after earning $500 million each last year.

In fact, six of the top eight on this year's ranking are considered to be full-fledged quants: managers who rely heavily on sophisticated computer programs as part of their process. This is a far cry from 2002, when just two computer-driven managers qualified for the initial ranking, including Renaissance Technologies founder James Simons, the only person to appear all 15 years.

This year Simons shares the top spot with Citadel's Kenneth Griffin, who has invested huge sums over the years in what he touts as a state-of-the-art computer system. They each earned $1.7 billion in 2015 after posting roughly midteens gains in their main hedge funds.

Bridgewater Associates'  Raymond Dalio, who also strongly relies on computers for making investment decisions, is tied for No. 3 with Appaloosa Management's David Tepper, the most successful hedge fund manager of all time among those who don't depend on computers.

The other quant to rank among the top eight earners is No. 6 David Shaw, a onetime Columbia University computer science professor and founder of D.E. Shaw Group, where Overdeck and Siegel worked before launching Two Sigma.

Wedged into fifth place is Israel (Izzy) Englander, founder of multistrategy giant Millennium Management, who earned $1.15 billion. Englander is one of five individuals on the Rich List who earned ten-figure paychecks last year. Altogether the top 25 earners made a combined $12.94 billion in 2015. This is up about 11 percent from the previous year but down substantially from the record $25.3 billion the Rich List managers earned in 2009, in the wake of the financial crisis.

To calculate an individual's earnings, Alpha counts gains on individuals' capital in their funds as well as their share of the fees. The median earner in 2015 made $275 million - the lowest median in five years - while the average top earner made $517.6 million, up from last year but down nearly 40 percent from $846 million two years earlier. To qualify for this year's top 25, a manager had to earn at least $135 million. This is the lowest minimum since 2011, when it took a mere $100 million in earnings to make the cut.

Over the 15 years of the Rich List, hedge fund managers on the ranking have made a total of $192.5 billion. This includes 30 people who were ranked in the first year, when a manager needed to earn just $20 million to appear, and 26 people in 2005 because of a tie for 25th place.

In 2015 six of the 25 managers qualified for the Rich List for the first time. In addition to Overdeck and Siegel, they include Joseph Edelman of Perceptive Advisors, who made $300 million after his health care-oriented Perceptive Life Sciences Fund posted a 51.8 percent gain last year, and macro specialist Jeffrey Talpins of Element Capital Management, who earned $225 million after generating a 22.7 percent gain in his flagship fund, mostly from successful bets on the U.S. Treasury market. Paul Marshall and Ian Wace, who founded Marshall Wace, make their debut after earning $145 million each from both quantitative- and qualitative-­oriented funds.

In a year when roughly half of all hedge funds lost money, a number of frequent Rich List members are conspicuously missing from the ranking because their funds finished in the red. They include John Paulson of Paulson & Co., Leon Cooperman of Omega Advisors, James Dinan of York Capital Management and Daniel Loeb of Third Point.

But losing money did not stop everyone from ranking among the top 25. Five managers qualified this year even though at least one of their funds fell in 2015. That group includes Michael Platt of BlueCrest Capital Management, Daniel Och of Och-Ziff Capital Management Group and the three top guys at Bridgewater - Dalio, Greg Jensen and Robert Prince  - whose All Weather Fund lost 7 percent even though their firm's larger funds made money.

Several Rich List regulars did not qualify for the main list but nonetheless were in the black last year. However, their gains were small or they were still below their high-water marks from earlier losses, so they wound up on the Second Team. They include Paul Tudor Jones II of Tudor Investment Corp., John Griffin of Blue Ridge Capital and O. Francis Biondi Jr. and Brian Higgins of King Street Capital Management.

 
Rank Name Firm 2015
Earnings ($)
1 Kenneth Griffin Citadel 1.7 billion
1 James Simons Renaissance Technologies 1.7 billion
3 Raymond Dalio Bridgewater Associates 1.4 billion
3 David Tepper Appaloosa Management 1.4 billion
5 Israel (Izzy) Englander Millennium Management 1.15 billion
6 David Shaw D.E. Shaw Group 750 million
7 John Overdeck Two Sigma Investments 500 million
7 David Siegel Two Sigma Investments 500 million
9 O. Andreas Halvorsen Viking Global Investors 370 million
10 Christopher Hohn The Childen's Investment Fund Management (U.K.) 300 million
10 Joseph Edelman Perceptive Advisors 300 million
Click to view the full ranking of the top 25 money earners

>


Related Articles


Latest Poll

How will hedge funds finish 2017?

 - 76%
 - 11%
 - 13%

View previous results