Hedge funds manage trillions of dollars in assets and are major players in the financial markets. This article ranks the 10 biggest hedge funds worldwide based on their assets under management (AUM) and provides an overview of each fund.
What are Hedge Funds and Their Assets Under Management?
A hedge fund is an investment fund that pools capital from accredited individuals and institutional investors. Hedge funds are actively managed, meaning they use various investing strategies and tools to try to generate alpha (excess returns over a benchmark).
The total assets under management (AUM) refers to the total market value of the investments that a hedge fund manages on behalf of its clients. AUM indicates the size and growth of a hedge fund over time. The more assets a hedge fund manages, the more fees it generates, allowing it to hire top talent and invest in infrastructure.
According to data provider Preqin, the global hedge fund industry had total AUM of $3.6 trillion as of December 2022. The largest hedge funds manage over $50 billion in assets each.
Ranking the Top 10 Biggest Hedge Funds Worldwide
Here are the 10 biggest hedge funds in the world ranked by assets under management as of December 2022:
1. Bridgewater Associates – $223 billion AUM
Bridgewater Associates, based in Westport, Connecticut, is the world’s largest hedge fund with approximately $223 billion in assets under management. Founded in 1975 by Ray Dalio, Bridgewater pioneered the “risk parity” approach that uses leverage across different asset classes. Bridgewater runs multiple investment strategies and products, but is known for its Pure Alpha fund.
2. AQR Capital Management – $186 billion AUM
AQR Capital Management is a quantitative investment firm based in Greenwich, Connecticut. AQR was founded in 1998 by Cliff Asness, David Kabiller, John Liew and Robert Krail. The firm has grown to manage over $186 billion in assets. AQR uses computer models and algorithms to trade stocks, bonds, commodities and derivatives based on patterns in the market and economy.
3. Millennium Management – $148 billion AUM
Millennium is a multi-strategy investment firm founded in 1989 by Israel Englander. Headquartered in New York, Millennium operates as a global macro hedge fund, utilizing fundamental and technical models over various asset classes and geographies. The firm has over $148 billion under management.
4. Citadel – $145 billion AUM
Citadel is a Chicago-based hedge fund and financial services firm founded by billionaire Ken Griffin. Citadel operates across five core investment strategies: equities, macro and commodities, credit, quantitative and fundamental portfolios. The hedge fund arm manages over $34 billion in assets, while the financial technology arm Citadel Securities accounts for a large portion of total AUM.
5. Elliott Management – $121 billion AUM
Paul Singer founded Elliott Management in 1977, pioneering the distressed debt investing strategy. Elliott has expanded into equity activism and now manages over $121 billion in assets. The New York-based hedge fund is known for taking concentrated, long-term positions and being an activist investor to unlock value.
6. Two Sigma Investments – $108 billion AUM
Two Sigma utilizes artificial intelligence, machine learning and big data analytics to inform its quantitative trading strategies. Founded in 2001 by John Overdeck, David Siegel and Mark Pickard, Two Sigma has grown into one of the largest hedge funds with over $108 billion under management. It is based in New York.
7. Man Group – $101 billion AUM
Man Group, headquartered in London, is the largest publicly traded hedge fund group globally with over $101 billion in assets. Man Group operates both quantitative and discretionary funds, offering services across various strategies to institutional and private investors. The firm was founded in 1783 and continues to innovate in technology, analytics and trading.
8. Point72 – $92 billion AUM
Point72 Asset Management was founded by legendary investor Steve Cohen in 2014 as a family investment office, later opening to outside capital in 2018. After large losses, Cohen transformed SAC Capital into Point72 which now manages over $92 billion in total assets. Point72 invests in equities through various strategies.
9. Hudson Bay Capital Management – $85 billion AUM
Sander Gerber founded Hudson Bay Capital in 2005 after working for other major hedge funds. Based in New York, Hudson Bay is an opportunistic, multi-strategy credit manager operating across structured credit, distressed and special situations investing. The firm has grown considerably to manage $85 billion in assets.
10. Renaissance Technologies – $65 billion AUM
RenTech is one of the pioneers of quantitative trading and models, having been founded in 1982 by James Simons. Renaissance utilizes complex mathematical models and algorithms to trade markets, boasting one of the greatest track records in the hedge fund industry with its Medallion fund. The New York-based firm has $65 billion under management.
Largest Hedge Funds Summary Table
|Rank||Hedge Fund||Location||AUM ( billions)|
|1||Bridgewater Associates||Westport, CT||$223|
|2||AQR Capital Management||Greenwich, CT||$186|
|3||Millennium Management||New York, NY||$148|
|5||Elliott Management||New York, NY||$121|
|6||Two Sigma Investments||New York, NY||$108|
|7||Man Group||London, UK||$101|
|9||Hudson Bay Capital Management||New York, NY||$85|
|10||Renaissance Technologies||New York, NY||$65|
This table summarizes the top 10 biggest hedge funds worldwide by their assets under management as of December 2022. The data illustrates the concentration at the top, with the largest hedge funds managing over $100 billion each. Bridgewater remains the biggest in the world with over $200 billion in AUM.
What is the Total Assets Under Management of Hedge Funds?
According to data provider Preqin, the total assets under management across the global hedge fund industry was approximately $3.6 trillion as of December 2022. For perspective, this is:
- Significantly larger than the $1.3 trillion hedge fund industry AUM in 2008 before the financial crisis
- Equivalent to around 1.7% of total global financial assets
- Less than half the $7.4 trillion in AUM managed by the private equity industry
The growth in hedge fund assets reflects increasing institutional investments over the past decade as endowments, pensions and sovereign wealth funds allocate more capital to alternative investments like hedge funds in search of diversification and absolute returns exceeding benchmarks.
Total hedge fund industry assets declined in 2022 amid market volatility and deteriorating macroeconomic conditions. However, the hedge fund sector remains strong with established multi-billion dollar firms dominating the rankings. The top 10 hedge funds alone account for over $1.2 trillion in AUM. Consolidation is expected to continue as institutional investors concentrate their hedge fund allocations to the largest, top-performing managers.
Which is the Biggest Hedge Fund in the World?
Bridgewater Associates is the biggest hedge fund in the world with approximately $223 billion in assets under management as of December 2022. Founded in 1975 by Ray Dalio in Connecticut, Bridgewater pioneered the risk parity approach and other unique investment strategies.
As the world’s largest hedge fund, Bridgewater has over 1,600 employees and offices globally. The firm serves over 300 institutional clients through its hedge fund and customized offerings. Bridgewater’s flagship Pure Alpha strategy has generated double-digit annualized returns since inception.
The size and success of Bridgewater Associates reflects its early mover advantage in quantitative, macro investing and focus on understanding market fundamentals, risk management and portfolio construction. Ray Dalio’s principles-based management philosophy has also been integral to growth. The fund leverages its scale with advanced technology, analytics and some of the best talent in the industry.
After Bridgewater, Millennium and AQR Capital Management are the next biggest hedge funds with over $180 billion in AUM each. Man Group and Citadel also manage over $100 billion positioning them among the biggest hedge funds worldwide. However, Bridgewater remains the largest hedge fund globally and acts as a trendsetter for quantitative macro investing.
Which Hedge Fund Has the Best Performance?
Renaissance Technologies’ Medallion fund is considered one of the best performing hedge funds ever, generating average annual returns of over 66% before fees from 1988 to 2018.
However, Renaissance Medallion is only available to current and former employees of Renaissance Technologies. It is closed to outside investors.
Among multi-billion dollar hedge funds open to institutional investors, Citadel’s Wellington fund and Millennium’s International fund have posted the highest returns in recent years:
- Citadel Wellington Fund – This global multi-strategy equities fund has produced annualized net returns of 21% since 2000. It practices high frequency trading and expertise in machine learning algorithms.
- Millennium International Fund – One of the earliest “multi-strat” hedge funds, it has generated annualized net returns of 13% since 1990. Millennium utilizes fundamental and technical models across geographies and asset classes.
Bridgewater’s Pure Alpha strategy has also exhibited strong long-term performance with annualized 12% net returns since 1991 despite its enormous size. Elliott Management and Two Sigma have produced high single digit to low double-digit net returns annually for their investors over the past decade as well.
Many other billion-dollar hedge funds have posted decent risk-adjusted returns, though not at Renaissance Medallion levels. Overall fund performance depends greatly on the market environment, investment strategies and portfolio management team. But Citadel Wellington and Millennium International represent some of the top open hedge funds in recent years by performance track record.
This article covered a ranking of the 10 biggest hedge funds worldwide, providing an overview of each major firm and its assets under management. Bridgewater Associates stands as the largest hedge fund with over $223 billion in AUM. The total size of the global hedge fund industry is estimated at $3.6 trillion in assets. Renaissance Technologies’ Medallion fund is considered one of the top performing hedge funds in history, while firms like Citadel Wellington and Millennium International have put up strong numbers for institutional investors more recently.
In summary, hedge funds manage trillions in assets and the top players wield major influence. The largest hedge funds benefit from economies of scale, technology advantages and talented teams to generate solid risk-adjusted returns over the long run. With increasing competition, industry consolidation around successful mega-managers is expected to continue. But for now, Bridgewater, AQR and Millennium remain the biggest hedge funds worldwide by assets under management.
Frequently Asked Questions
What does AUM stand for in hedge funds?
AUM stands for “assets under management”. It represents the total market value of investments that a hedge fund manages on behalf of its clients and investors. AUM is a measure of a hedge fund’s size and growth over time.
How is a hedge fund different from a mutual fund?
Unlike mutual funds, hedge funds are actively managed, use leverage and derivatives, and follow flexible strategies to generate absolute returns in both rising and falling markets. Hedge funds have higher fees but are lightly regulated. They require accredited investor status and come with liquidity restrictions.
What are the main hedge fund strategies?
Common hedge fund strategies include: long/short equity, global macro, event-driven, relative value, distressed debt, managed futures, and multi-strategy funds that combine multiple approaches. Top hedge funds use both fundamental and quantitative techniques.
Which hedge funds are open to retail investors?
Retail investors have limited access to top-tier hedge funds, which typically require $1 million minimum investments. Some newer hedge fund managers offer lower minimums to attract capital. There are also some liquid alternative mutual funds that mimic hedge fund strategies for retail investors.
Do hedge funds beat the market?
Some hedge funds consistently beat market returns through skill and alternatives strategies. But the average hedge fund has underperformed the S&P 500 over the past decade, sparking debate around their high fees. Top performers tend to be institutional funds focused on alpha generation rather than asset gathering.
How can I invest in hedge funds?
Investing in established billion-dollar hedge funds requires being an accredited investor with a minimum $1 million allocation. Wealthy individuals need to connect with a fund-of-funds or investment consultant who vets and accesses top-tier managers. For others, some newer hedge funds have lower minimums and retail liquid alts are an option.
In another related article, What is a Fund of Hedge Funds? Overview and Investment Approach