The world's top hedge funds raked in record profits last year amid a resurgence in stock markets, new analysis showed.
The 20 leading funds made $67 billion in investor profits in 2023, up from the $65 billion recorded during the pandemic-era rally of 2021, according research Monday from LCH Investments, a fund of hedge funds. That's also around triple the $22.4 billion fund managers earned for investors in 2022.
Overall, the fund management industry recorded gains of $218 billion after fees, according to LCH Investments estimates.
The top funds — identified as those which have performed best in dollar terms since their inception — accounted for around one-third of annual profits last year, despite managing less than a fifth (19%) of the industry's assets.
Included among the best performers were Christopher Hohn's TCI, Ken Griffin's Citadel and Andreas Halvorsen's Viking.
Top 20 managers by 2023 profits
| Firm | Assets (billion) | Net profits since inception (billion) | 2023 profits (billion) | Launch year |
| TCI | $50 | $41.3 | $12.9 | 2004 |
| Citadel | $56.8 | $74 | $8.1 | 1990 |
| Viking | $30.5 | $40.9 | $6 | 1999 |
| Millennium | $61.9 | $56.1 | $5.7 | 1989 |
| Elliott | $62.2 | $47.6 | $5.5 | 1977 |
| DE Shaw | $43.8 | $56.1 | $4.2 | 1988 |
| Lone Pine | $15.9 | $35.6 | $4.2 | 1996 |
| Baupost | $27.4 | $37 | $3.8 | 1983 |
| Pershing Square | $17.9 | $18.8 | $3.5 | 2004 |
| SAC/Point72 | $31 | $33 | $3 | 1992 |
| Appaloosa | $17 | $35 | $2.7 | 1993 |
| Farallon | $40.4 | $35.7 | $2.6 | 1987 |
| Och Ziff/Sculptor | $28.7 | $32.2 | $2.3 | 1994 |
| Egerton | $14 | $23.9 | $2.3 | 1995 |
| David Kempner | $37 | $21 | $1.8 | 1983 |
| King Street | $9.5 | $19.5 | $0.9 | 1995 |
| Brevan Howard | $35.6 | $28.5 | $0.4 | 2003 |
| Caxton | $13.4 | $19.5 | $-0.3 | 1983 |
| Bridgewater | $72.5 | $55.8 | $-2.6 | 1975 |
| Soros | N/A | $43.9 | N/A | 1973 |
Source: LCH Investments
Brad Amiee, director and head of research at LCH Investments, said the leading funds were buoyed by the stock market's "fantastic run" in 2023. However, he added that many also showcased especially savvy stock selection strategies.
"You could argue that, since shorting is such a challenging sub-strategy, keeping things long-biased and having a concentrated portfolio of high quality positions has been the way to go," Amiee told the Financial Times.
TCI, the top ranking fund, recorded investor profits of $12.9 billion and ended last year up 33%, beating the S&P 500's 24% gain.
Included in its largest holdings were Alphabet, Canadian National Railway, Visa and General Electric.
Citadel, which ranked second in 2023, made $8.1 billion in profits after bringing in a record-breaking $16 billion in 2022. Its $74 billion in gains since inception rank it as the most successful hedge fund in history.
The research also found that the top 20 funds have made a combined $755.4 billion in profits since inception, well above the $655.5 billion in total managed assets.
A hedge fund is a limited partnership of private investors whose money is managed by fund managers. Hedge funds are typically known for investing in higher-risk and more nontraditional assets compared with mutual funds.