Top hedge fund manager earns $1.3bn in 2014

Hedge fund returns were muted in 2014 but pay for top earners was stellar

For investors in hedge funds, like big pension funds, 2014 was not a lucrative year. But for those who managed the investors’ money, the pay was spectacular. The top 25 hedge fund managers reaped $11.62 billion in compensation in 2014, according to an annual ranking by Institutional Investor’s Alpha magazine. That collective payday came even as hedge funds, once high-octane money makers, returned on average low-single digits.

In comparison, the benchmark Standard & Poor’s 500 index posted a gain of 13.68 per cent last year when reinvested dividends were included.

Still, the men (no woman has ever made the cut) at the top of the hedge fund universe now run firms that are bigger than they have ever been. Their influence is growing beyond the industry and even beyond Wall Street. They lobby in Washington, donate to political campaigns nationwide, and can pick their advisers from a pool of former central bankers.

Topping the list is Kenneth Griffin, who started by trading convertible bonds out of his dormitory at Harvard. He took home $1.3 billion last year. James H. Simons, a former National Security Agency code breaker who makes billions of dollars every year from his hedge fund, Renaissance Technologies, earned $1.2 billion. And Raymond Dalio, who runs the world's biggest hedge fund, Bridgewater Associates, with more than $170 billion in assets under management, reaped $1.1 billion. A close fourth was William Ackman, known for making large and concentrated bets. He earned $950 million in 2014.


The pay estimates are based on the value of each manager’s stake in his firm and the fees charged. Investors in hedge funds generally pay an annual management fee of 2 per cent of the total assets under management and 20 per cent of any profits.

The overall pay for top earning hedge fund managers was down by hundreds of millions of dollars in 2014; they made just over half of the $21.15 billion earned by the top 25 in 2013. And many of the top earners had mediocre performances at best; only half of them recorded returns that exceeded that of the S&P 500.

New York Times