Rising Markets Lift Hedge Funds to Huge Gains (2024)

As stock markets soared in 2023, so did the fortunes of many of the world’s biggest hedge funds.

The 20 best-performing hedge funds made $67 billion in gains last year, triple what they reported in 2022, according to data released by LCH Investments, a so-called fund of funds that ranks the top 20 firms on lifetime gains, after fees.

The strong performance by elite financiers follows the rally that stock markets have enjoyed over the past year. The S&P 500, Wall Street’s most widely followed benchmark, hit a record last week.

That has benefited hedge funds, especially those that make focused bets on individual stocks. Many in the industry have invested heavily in the “Magnificent Seven” tech stocks — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla — though some on Wall Street have grown increasingly worried that too many investors are betting on the same companies.

In some ways, the data reflects the growing divide between the industry’s top players and everyone else. The top 20 firms oversee just under 19 percent of the industry’s $3.5 trillion in assets under management, yet they represent 46 percent of the sector’s total lifetime gains.

At the top of the list for 2023 performance was TCI, an activist hedge fund run by the financier Christopher Hohn, which reported $12.9 billion in net gains. Other top performers last year include Citadel, D.E. Shaw, Millennium and Elliot Management.

The big firms that reported losses last year include Bridgewater Associates, the firm founded by the outspoken billionaire Ray Dalio, and Caxton Associates.

Returning to the top 20 by lifetime returns in the latest ranking was Pershing Square Capital Management, the firm run by William A. Ackman, who is perhaps best known recently for demanding the resignations of the presidents of M.I.T., Harvard and the University of Pennsylvania over concerns about their handling of antisemitic acts on campus.