LCH Investments have updated their estimates of the world’s greatest money managers to December 31, 2024 and the list is attached.
The top 20 managers made $93.7bn net of fees for their investors in 2024 and have made $854.5bn net of fees for their investors since inception.
Hedge fund managers overall made $289bn for their investors in 2024. This brings the net gains since inception to $1,927bn, of which 44.3% has been made by the top 20 managers. The top 20 managers managed 20.2% of the total assets under management at end-2024.
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Comments from Rick Sopher
Commenting on the data, Rick Sopher said:
On the 2024 results of hedge funds:
“In 2024 the top 20 managers made gains for their investors of $93.7bn. Performance was positive and strong across the top 20”.
“The greatest gains in dollar terms were generated once again by the large firms which allocate on a multi-manager basis mainly to internal teams, Citadel, DE Shaw and Millennium.”
“Strong performances were also achieved by long-biased equity managers, not surprising given the strength of equity markets generally.”
“The top 20 managers generated asset-weighted returns of 13.1%, once again significantly outperforming the average hedge fund which, as measured by the HFRI Asset Weighted Composite Index, returned 8.3%. In most cases these managers have been generating above average performance over several decades reflecting the persistence of their superior returns.”
On the top 20 managers’ gains relative to their AUM:
“The top 20 managers have generated more gains since inception ($854.5bn) than they currently have in assets under management ($739.8bn). In most cases this is because they have periodically either closed to new subscriptions or returned capital, recognising that carefully controlling asset growth is a good basis for generating significant gains for investors over time, evidenced again by several returning capital during the most recent period.”
Fees
Our published analysis of hedge funds has previously only referred to the net gains made by investors (after fees). We now share some further analysis, showing the gross gains generated by managers (before fees), the level of fees charged to investors, and the resulting net gains made by investors (after fees).
On fees charged by hedge funds:
We estimate that since inception in around 1969 to 31 December 2024, hedge funds have generated $1,927bn net of fees for their investors, an impressive total. This net gain however masks the significant level of fees (both management and performance fees) that are charged to investors. Since inception, we estimate that fees charged amounted to $1,795bn and that the gross gains made by managers before fees amounted to $3,722 bn. Fees therefore represented 48.2% of the gross gains since inception, leaving investors with only 51.8% of the gains.
On the level of fees charged by hedge funds:
In the early days of hedge funds (1969 to the early 2000s), we estimate that hedge fund fees represented less than 30% of gross gains. However, the fees taken by hedge funds has risen to a level in the past two decades of 50.4% of gross gains (and 48.2% since inception).
The increase in the fee take as a proportion of gross gains is explained largely by the fall in the gross percentage returns made by hedge funds, combined with the upward creep in the average percentage fee rates charged by hedge funds, especially for management fees.
Rick Sopher said:
“When hedge funds started in around 1969, early investors like Leveraged Capital Holdings (LCH) typically paid a management fee of 1% and a performance fee of 20%. Performance was generally strong, and fees remained at around that level until the 2000s. But over the past two decades, as overall gross returns from hedge funds fell below the strong returns of the early decades, the level of fees actually increased; in the case of management fees, they increased to levels as high as 1.5% or even 2% or more.”
The increase in the overall fee take from around 30% of gross gains to around 50% of gross gains is largely due to the impact of the fixed management fees, which have come to represent a higher proportion of gains than they used to. Whereas fixed management fees used to represent less than 10% of gross gains in the first decades of hedge funds, they represented an estimated 29.5% of gross gains in the past two decades.
Rick Sopher said:
“The increase in overall fees as a proportion of gross gains from around 30% (in the early decades of hedge funds) to around 50% (in the past two decades) is largely due to the increase in the management fee element, which has increased from around 10% to around 30% of gross gains”.
Explaining a further element of the hedge fund fee take, Rick Sopher said:
“The overall fee take is governed by a variety of factors including, but not limited to, investment performance and the percentage level of management and performance fees. However the overall fee take is also impacted by investors not recovering performance fees previously paid when investors redeem or funds close down below their high water mark following a drawdown. This factor becomes particularly meaningful during periods when hedge funds suffer significant losses such as the Global Financial Crisis of 2008 and in some subsequent years.”
On the fee levels of the top 20 managers:
“The overall fee take (as a percentage of gross gains) of the managers in the top 20 is estimated at 34.3% of gross gains, considerably less than the 55.7% of the remainder of the industry since inception. Although the top 20 managers generally charge percentage fees which are higher than the average, their higher gross returns, more stable capital bases and their tendency not to generate large drawdowns following which investors have withdrawn capital bring down the overall fee take.”
Basis of Preparation
Our sources are a combination of meetings and contacts with the founders and managers of the respective firms, audited and management reports, internal estimates and other confidential sources. Net gains typically include money made by the founder or manager on their own investment in the firm’s investment vehicles. We have included the gains made by firms after the official retirement of the founder, provided the investment approach remains substantially unchanged. Our criteria for inclusion include that the founder or manager should be the lead investment manager of an investment vehicle or vehicles which are mainly open ended or invested in liquid assets.
When the manager formally ceases to manage money for outside investors, the net gains are typically frozen at that point. Gains generated by discretionary investment managers who also manage “long only” investment vehicles are included; gains made in investment vehicles which are structurally linked to the performance of an index, as well as gains made in closed end vehicles designed to be structurally long a specific class of assets, such as CLOs, are excluded. In such cases, the assets under management are shown for the corresponding hedge fund assets only. Sources for hedge fund assets under management, fees and flows include: Nasdaq eVestment, HFR and internal estimates, including consideration of the fee impact of investor flows and fund closures.
About LCH Investments NV (LCHI)
LCHI managed and advised on investments in hedge funds on behalf of Edmond de Rothschild and other investors between 1969 and 2025, including Leveraged Capital Holdings, the world’s first fund of hedge funds, for which the value of one share at launch in 1969 has multiplied by 172 times to 31 Dec 2024, representing a return of 9.8% a year.
Rick Sopher
Rick Sopher is Chairman of LCH Investments NV, the investment advisor of LCH. He is also CEO of Edmond de Rothschild Capital Holdings Limited.
Brad Amiee
Brad Amiee is a Director of LCH Investments NV and Head of Research at Edmond de Rothschild Capital Holdings Limited.