Each year I chronicle the hedge fund managers who personally make the most money in a single year. Institutional Investor’s sister publication, AR Magazine, will be publishing their now-famous Hedge Fund Rich List soon.
However, you couldn’t blame investors in these funds for asking, “What has he done for me?”
Well, Rick Sopher has the answer. The Managing Director of LCH Investments, a London-based fund of funds affiliated with Edmond de Rothschild Asset Management Ltd., a London-based fund of hedge funds, did some calculations to determine which hedge funds produced the greatest net gains for their investors since inception.
It makes for very interesting reading. Altogether, Sopher calculated that the 10 most prolific managers alone have generated $154 billion in profits for their investors. This data is as of June 30, 2010. He is currently calculating the results for the most recent year.
So, which manager has delivered the most profits? Not a huge surprise: George Soros, whose Quantum Endowment fund is the latest iteration of a fund that was launched in 1973. It has generated $32 billion in net gains.
The number two manager? John Paulson, with $26.35 billion. However, he launched his first fund in 1994 — 21 years after Soros.
The third most profitable firm lags way behind Paulson: Ray Dalio’s Bridgewater Pure Alpha. The fund, launched in 1975, has generated $13.278 billion.
Conspicuously missing is Jim Simons’s Medallion Fund. However, sources theorize it was left off because for years the fund has only been available to partners and employees. Also, it is quantitatively driven rather than managed by human beings. However, I don’t buy the logic of the latter explanation.