Ray Dalio, head of Bridgewater, the world’s largest hedge fund, personally made $3.9 billion in a year that his $70 billion Pure Alpha fund produced $13.8 billion of investment profits for its investors, according to industry rankings.
He tops a list published Friday by Absolute Return magazine of the richest 25 hedge fund managers. The select group took home $14.4 billion in pay and paper profits on their own investments last year, down from $22 billion in 2010 in a sign of the industry’s struggle to deliver returns for its clients in 2011.
The list is also a poor advert for the sector, as four of the top five managers made their money from funds closed to new investors. And it was only in January that all the investors in Citadel, the only open fund, run by fourth-placed Ken Griffin, finally recovered losses sustained during the financial crisis.
The average haul for the 25 was $576 million, down from $880 million in 2010, in a volatile year when the average hedge fund lost 2 per cent of its investors’ money.
This illustrates the gulf in pay between the top ranks of a diminished banking sector and riches still available from hedge funds. Mr Dalio’s estimated pay was 480 times the $8.1 million received by Brian Moynihan, chief executive of Bank of America , even as his package quadrupled from the year before. Larry Fink, head of BlackRock , the world’s largest asset manager, and one of the best paid executives in finance, earned $22 million in 2011.
Bridgewater manages about $70 billion in hedge fund assets and another $50 billion in “beta” products, mainly for pension funds. Mr Dalio is judged the most successful manager of all time in terms of absolute profits by LCH Investments. He has also signed the giving pledge to donate half of his wealth to charity.
Second and third place went to two hedge fund managers who have retired. Carl Icahn made $2.5 billion after returning the outside capital in his fund to investors early last year. James Simons, founder of Renaissance Technologies, made $2.1 billion.