While hedge funds are estimated to manage almost $3 trillion in assets, the top hedge funds are responsible for a large chunk of that number. In fact, the largest hedge funds manage about $1.6 trillion, more than half of total assets under management. Despite hedge funds losing a combined $24 billion in 2007, total assets grew over 30% from the previous year. Here is the current list of the largest hedge funds.
Taking the cake for the largest hedge fund manager is JPMorgan Chase , through both JP Morgan Chase Asset Management and Highbridge Capital Management. Despite posting losses of $8.5 billion through various funds last year, the company still overseas $44.7 billion in assets. JPMorgan Chase invests in everything from real estate to statistical arbitrage products while employing a diverse range of hedge fund mangers with differing styles and investment philosophies.
2 & 3. Bridgewater Associates and Farallon Capital Management
Tied for the number two position, these firms each manage $36 billion in assets. The Connecticut based Bridgewater prides itself on emerging markets, commodities, currency, global fixed income, bonds and equity investments.
The San Francisco based Farallon is the choice for many institutions and ultra-wealthy individuals. This hedge fund is very event driven and looks for opportunities to invest in, while shorting on others, in an attempt to hedge their risk. Farallon moved up three spots on the list since last year, mainly from capitalizing on the housing market situation.
4. Renaissance Technologies
Despite suffering losses from the U.S. subprime mortgage crisis, New York based Renaissance Technologies still managed to make the #4 spot, with $34 billion under management. The firm’s famed Medallion fund, which averages around 35% annual returns, charges investors a hefty 5% management fee and 44% performance fee. Renaissance employs a global macro strategy, and tends to hire experts with a scientific and mathematical background, rather than a financial one.
5. Och-Ziff Capital Management
After going public last year, Och-Ziff rose to the number 5 spot, managing $33.2 billion. The New York based hedge fund’s strategies include private equity, real estate, and equity restructuring, investing over half of their portfolio in foreign markets. The firm has been experiencing some recent trouble in 2008, with all four of their funds reporting losses in the first quarter. Executives attribute this to the $3.3 billion in expenses they incurred during the IPO and reorganization last November.
6. D.E. Shaw
Dropping a few spots on the list is DE Shaw, who manages $32.3 billion. The New York based hedge fund likes to buyout distressed companies, while financing and developing new companies. They also dabble in commodities, emerging markets, currencies, real estate, and venture capital. Like Renaissance Technologies, D.E. Shaw prides themselves on using math whizzes and computers to locate opportunities in the market. It is widely known that only 1 in every 500 applicants at D.E. Shaw makes the cut.
7. Goldman Sachs
Falling from the number two position is the New York based Goldman Sachs, who manages $29.2 billion, about $3 billion less than they managed last year. They generally invest in currency, real estate, private equity, and venture capital while using a multi-strategy approach. Goldman’s long-short Global Equity Opportunities fund and the Global Alpha fund both plummeted about 30 percent of their value last year as a result of the subprime fallout.
8. Paulson & Co
A new addition to the list, John Paulson and his company, Paulson & Co. now manage $29 billion after correctly betting that subprime loan holders would default on their mortgages. Paulson went down in history as having the biggest day ever on Wall Street, about $3 billion. The New York based hedge fund invests in public equity markets across the globe, and employs merger arbitrage, long/short, and event-driven strategies while using fundamental analysis to make its investments.