With so many alternative investment companies out there, knowing which one are the best bang for the buck can be a game-changer for choosing where to invest. Fund success can be categorized by several characteristics, but we found it most relevant to measure them by the size of the assets under management and three year return history.
While heavyweights like Bridgewater Associates, Millennium Management, and Renaissance Technologies gather largest hedge fund assets in the best-performing hedge funds are different players. In 2024 top hedge funds by sheer returns are Robotti & Company Advisors, Peconic Partners, and Donald Smith & Company.
Best Performers By AUM
Bridgewater Associates - $124.317 Billion
The fund was founded in 1975 by industry legend Ray Dalio. This success story started in a Manhattan apartment and developed into one of the most respected alternative investment companies.
Focus on the fund are institutional investors like pension funds, endowments, family offices, central banks, and even governments. Also, they manage the capital of high-net-worth individual investors.
Their most important products are actively managed funds Pure Alpha, and Pure Alpha Major Markets. In essence, Bridgewater is a global macro firm and it uses quantitative investment methods to find new investment opportunities. To counter risk, the fund invests in a highly diversified portfolio that reaches all parts of the globe.
Renaissance Technologies - $106.026 Billion
With a long history dating back to 1982, Renaissance built its name through several of its funds, such as the pinnacle Medallion Fund. The company was founded by a math wiz, James Simons, who found a new way to utilize mathematical and statistical methods to make bets on the market.
While the flagship Medallion Fund is reserved for employees, the company offers institutional equity, institutionally diversified global alpha, and institutionally diversified alpha funds to outside investors.
The core of the team behind the company is non-finance employed specialists, coming mostly from a mathematical background. By analyzing mathematical models, they analyze and conduct trades, out of which most are automated.
AQR Capital Management - $94.523 Billion
Founded by a quartet consisting of Cliff Asness, David Kabiller, John Liew, and Robert Krail, AQR stands for Applied Quantitative Research. The name indicates the original thesis behind investment decisions, which focuses on identifying long-term, repeatable sources of returns.
The firm emphasizes high diversification among portfolios with a low correlation to traditional asset classes. While there are four distinct approaches to investing - value, momentum, defensive, and carry, AQR uses them together, employing their diversifying qualities.
The company has a high number of employees with a PhD, and in 2015 they founded QUANTA Academy, a learning and development program. It keeps three core elements as its goals - mastering technical skills and knowledge, leadership and management, and personal enrichment.
Two Sigma - $64.471 Billion
Two Sigma was led by two of its founders from 2001 - John Overdeck and David Siegel until 2024. The co-CEOs that stepped in are Carter Lyons and Scott Hoffman.
The company has several specialized divisions, including private investments, venture capital investments, and high-frequency broker dealing.
Core principles include the use of technology and data sciences, which are equally divided into financial services. They also heavily rely on machine learning to develop trading models that can produce the best results.
Millennium Management - $56.670 Billion
Founded and still led by the industry veteran Israel Englander, Millennium, since its foundation in 1989, was often noted on top of the best-performing hedge funds lists.
The company has a unique platform model of investing that revolves around 330 investment teams. Every portfolio manager has a preferred investment strategy, making independent investment decisions with the same collaborative culture.
The fund's five core strategies include fundamental equity, equity arbitrage, fixed income, commodities, and quantitative strategies.
Best Performers By YTD Gains
Robotti Company - 173.87% Three Year Gain (39.91% Annually)
The company was founded in 1983 by Bob Robotti and Dan Eng. It is characterized by a classic value investing approach; thus, the perfect stocks are undervalued stocks. They do not think about stocks just like pieces of paper, but rather as a fractional ownership in the business.
Robotti looks ahead and tries to assess the profits over the three to five-year period. In some cases, they even aim to get a board member spot, which allows them to maximize returns from inside the company.
As a company that emphasizes entrepreneurial culture, its aim is to cooperate with companies that share the same values. Hedge fund managers can brag about extensive experience working in the same team which brings cohesion to the workplace.
Peconic Partners - 123.17% Three Year Gain (30.68% Annually)
A long-serving hedge fund dating back to the late 70s when it was founded by William Harnish. In 2004 the team separated from the rest of the fund that went private, creating Peconic Partners.
Peconic employs a highly disciplined thematic strategy which remained constant over the decades. The goal is to generate long-term positive results regardless of the market conditions. Management is combining in-depth fundamental, quantitative, and technical analysis to gain insights about potential new capital allocation.
Their long-term macro investment themes require a disciplined approach, however, the team is prone to evolution aiming to anticipate future trends in the stock market.
Donald Smith & Company - 88.73% Three Year Gain (23.58% Annually)
Donald G. Smith a friend of Benjamin Graham, founded Donald Smith & Co in 1980. Friendship with Graham shaped Smith's investment approach which was based on identifying undervalued companies that have a potential for more.
Today, the firm uses a deep value investing approach in out-of-favor stocks which are in the bottom decile of price-to-tangible book value ratios. However, the stock is not only to be cheap but to have the potential to deliver positive gains in the two to four-year period.
The portfolio of the company is highly diversified, and they invest from micro to large-cap companies. The pool of potential targets is between 200 and 300 firms from which they choose which will analyze deeper.
SIR Capital Management - 68.64% Three Year Gain (19.03% Annually)
Founded in 2007 SIR Capital Management is not only a hedge fund, but it also provides investment advisory services to funds. The company aims to deliver high gains uncorrelated to market indices. To achieve this they use a wide range of relative-value strategies and instruments.
They have a low net exposure while their core investments have a time horizon between three and six months. However, depending on the asset and the strategy it can range from a couple of days to two years.
Mangrove Partners - 65.01% Three Year Gain (18.17% Annually)
In fifth place is another value investing firm Mangrove Partners. The priority of the company is to organically compound net worth while minimizing the risks involved resulting in a permanent loss of capital.
Fund operations are grouped into four strategies - long/short, capital structure arbitrage, stressed and distressed, and liquidation and arbitrage. From this, we can see that besides value investing, Mangrove is also keen on event-driven scenarios.
Managers are keeping a portfolio both in the short and long book well hedged with beta and alpha adjusted net exposure up to 30% net long.
Closing Thoughts
Hedge funds often employ risky strategies that can leave their investors empty-handed. That is why before you decide to place your capital into someone's hands, check its track record, and what you can at least anticipate to get.
On this list, there is a mix of the largest hedge funds that are top choices for many individual and institutional investors. However, among the top gainers, there are a lot of names unknown to the public, which we decided to present to our readers.
Due diligence is the key to investment success, and if you find any of these stories above tempting, check how your goals align with theirs, before making any bets. Happy investing!
