Numbers can be deceiving. The hedge fund industry appears to be healthy, with total assets doubling in the past five years and now exceeding $3 trillion for the first time ever, according to data tracker eVestment. But most managers have been plagued by chronic single-digit returns: The average hedge fund has lagged major market indexes over the past five years, trailing the S&P 500 by 2,000 basis points last year alone. As a result, industry players are being forced to adapt. Investors are reconsidering their strategic relationships with funds and many managers are changing their management styles to better align their interests and produce the outsized returns of the pre-crisis era.

But not all firms are equally challenged. At the 12th annual Hedge Fund Industry Awards gala on Thursday, June 26, Institutional Investor recognized some of the hedge fund managers and investors who stand out not only for their performance but for their thoughtful approach to asset management in this challenging market environment. More than 500 guests and honorees from across the hedge fund community — representing managers, funds of funds, consulting firms, endowments, foundations and corporate and public pension funds — gathered at New York’s ritzy Mandarin Oriental for an evening of celebration over champagne and a three-course dinner.

Among the most distinguished guests were Joshua Friedman and Mitchell Julis, who were presented the Manager Lifetime Achievement Award by II editor Michael Peltz in recognition of their contributions to the industry over their nearly four-decade-long careers, much of which was spent together. Friedman, 58, and Julis, 59, got their starts at Goldman, Sachs & Co. and Wachtell, Lipton, Rosen & Katz, respectively, before teaming up at Drexel Burnham Lambert in the 1980s. After Drexel’s famed collapse, the duo founded Los Angeles–based Canyon Partners, a now $24 billion firm that was voted the top Credit-Focused Hedge Fund Manager on Thursday for the second consecutive year. Friedman and Julis had many people to acknowledge for their success, but above all they thanked their mothers, who accompanied them to the dinner.

Peltz also presented the Outstanding Achievement Award to Glenn Fuhrman and John Phelan of MSD Capital. The co-managing partners of the New York–based firm, which they founded in 1998 to manage $400 million for personal computer magnate Michael Dell’s wealth, have expertly guided MSD through several bear markets. The firm now has 105 employees and manages $15 billion, up from $400 million when Fuhrman and Phelan started.