What Are the Largest Hedge Funds in the World?

Bigger isn’t always better. Sometimes you get investment funds that are too large for their own good. The main issue with the size of funds and the gathering of investment capital is that it’s sometimes-detrimental to returns. Often, the highest returns come from small companies and unusual investments which are difficult to access when you have billions of dollars to deploy into investment strategies. Therefore, it takes a certain kind of skill as either a lead investor or as a team to manage the large hedge funds and achieve pleasing results where fund size isn’t a factor in outperformance of indices like the Russell 3000 Index or the S&P 500 Value index.

Here are a few of the largest hedge funds that have managed to continue to perform well despite their growing size.

Bridgewater Associates

Ray Dalio (and Bob Prince) are the people behind Bridgewater Associates which has invested money for four decades on behalf of qualified investors. Their assets under management have reached close to $200bn.

Tony Robbins, who recently co-wrote a book on investment called “Money: Master the Game” which featured advice from Ray Dalio has been quoted as saying that Dalio is exceptional and one of the smartest people he’s ever met. Rather than being inaccessible to laypeople, there are YouTube interviews and other comments that let non-accredited investors (who lack the financial wherewithal to invest in a hedge fund) to appreciate his genius.

Man Group

The Man Group, primarily owned by Jon Aisbitt, was originally founded in 1783. It currently has assets close to $80bn under management. The investment company is particularly focused on alternative assets rather than mainstream investing and is based in London, England.

Private investors can access several of the Man Group’s investment vehicles on the London Stock exchange without necessarily needing to be a millionaire to do so.

Baupost Group

The Baupost Group founded by Seth Klarman in 1982 has assets under management of approximately $30bn. His firm has a deep value orientation where he looks to buy undervalued assets, work with management to make changes to operations and then realize a substantial upside when the company recovers.

Klarman is a follower of Ben Graham and Warren Buffett and penned his own book a couple of decades ago that’s difficult to get hold of called, “Margin of Safety.” It’s named after one of Graham’s rules about safer investing after suffering heavy losses in the 1929 stock market crash and subsequent depression. His annual newsletter to shareholders is tough to access for non-investors in Baupost but is required reading for anyone invested in the value style of investing.

Grantham, Mayo, Van Otterloo & Co.

Grantham, Mayo, Van Otterloo & Co. was created by Jeremy Grantham in 1977. The firm relies heavily on its own research particularly using frequently updated, published financial valuation models indicating which asset classes are over, under or fairly valued. GMO also provides their expected future financial return estimates based on their models.

The company has close to $100bn under management which fluctuates considerably particularly in down markets where sometimes investors fail to hold through the rocky periods. History has shown Grantham’s predictions are often accurate and those investors who held on and doubled-down on their fund positions were richly rewarded.

Looking at the larger hedge funds, it’s fascinating how they each find a different approach to investing in the financial markets. Success over decades is a good indicator that their market-beating results are not a fluke as some would have you believe. Lucky streaks simply don’t last that long, across multiple active investors, to be considered statistically insignificant. These financial firms know what they’re doing.


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