In this article, we reviewed the hedge fund industry and why it is set to grow at a healthy pace. We also examined the 20 largest hedge funds in the world and their top stock picks. You can skip our detailed discussion and jump directly to the 5 Largest Hedge Funds in the World and Their Top Stock Picks.
The hedge fund industry has expanded rapidly over the last three years due to market volatility. In 2023, the industry is expected to reach a record $5 trillion in assets under management. The strong capital inflows suggest that investors view hedge funds as an appealing alternative investment option in volatile markets. According to Goldman Sachs, hedge funds will outperform 60/40 portfolios in 2023 after returning 11.8% in 2020, 13% in 2021, and significantly outperforming 60/40 portfolios in 2022. Data from the past also suggests that hedge funds perform well in volatile markets and high-interest-rate environments. Long-short equity strategies have generated an 8% return year to date, while multi, relative value, and credit strategies have also performed well so far in 2023. According to PivotalPath data, every hedge fund strategy it monitors has been profitable so far this year, and 75% of the funds it tracks remain profitable, with an average return of 9.1%.
“Total equity positions and total equity assets under management have increased in the third quarter at a pace we haven’t seen since 2015, suggesting a healthy appetite for stocks in the financials, energy, and healthcare sectors,” said Pavle Sabic, Head of Market Development, S&P Global Market Intelligence.
Lower volatility in the last decade has reduced trading opportunities for hedge funds. However, market fundamentals have shifted dramatically in the last three years, with uncertainty and volatility at one of the highest levels due to a variety of factors, including tail event risks. Currently, investors are unsure whether the global economy is entering a recession, whether there is a risk of financial contagion, how geopolitical instability will affect businesses, and how long the Fed will continue to tighten policies.
Higher volatility and uncertainty are likely to drive investors to alternative strategies such as hedge funds. Hedge funds are investment partnerships in which capital is pooled to invest in multiple assets to maximize returns and minimize risk. Hedge funds have a long history, dating back to 1949 when the first hedge fund was launched by A.W. Jones & Company.
Currently, there are thousands of hedge funds operating across the world. Some of the largest hedge funds in the world include AQR Capital Management, Renaissance Technologies, Man Group plc, Bridgewater Associates, and Berkshire Hathaway. The top stocks in hedge fund portfolios, according to data tracked by Insider Monkey, include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:META), Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and NVIDIA Corporation (NASDAQ:NVDA).
Methodology:
To identify the largest hedge funds in the world and their top stock picks, we conducted a thorough analysis of the hedge fund industry. The hedge funds listed below are ranked based on their AUM as of June 30, 2023. Insider Monkey tracks over 910 hedge funds and offers their US equity portfolios. You can track each of these hedge funds on our website.
20. Lone Pine Capital
Assets Under Management: $17 billion
Lone Pine Capital was founded in 1997 by Stephen Mandel, who gained experience working with Julian Robertson. He is a bottom-up investor and is known for his excellent stock-selection abilities. Lone Pine has generated double-digit annualized returns since its inception. As of the end of June, Lone Pine’s 13F portfolio was valued at around $11 billion. Lone Pine’s portfolio is heavily weighted in the technology, communication, and consumer cyclical sectors. Microsoft Corporation (NASDAQ:MSFT) and Amazon.com, Inc. (NASDAQ:AMZN) are among its top stock picks. Both companies are also well-liked by other hedge funds. According to data from 910 hedge funds tracked by Insider Monkey, Microsoft Corporation (NASDAQ:MSFT) was in 300 portfolios at the end of the June quarter, while Amazon.com, Inc. (NASDAQ:AMZN) was in 278.
19. Baupost Group
Assets Under Management: $25 billion
Thanks to Seth Klarman's value investing strategy and his acute understanding of economic trends, Baupost Group has grown to become one of the largest hedge funds in the world. The fund's average annual return of 20% since inception demonstrates Seth Kalrman's ability to pick stocks and predict market movement. He is dubbed "the Oracle of Boston" due to the exceptional performance of his hedge fund. Baupost Group had $25 billion in assets under management and $5.6 billion in a 13F portfolio at the end of the second quarter. Alphabet Inc. (NASDAQ:GOOG) and Viasat, Inc. (NASDAQ:VSAT) are among the firm's top stocks. According to Insider Monkey data, Alphabet Inc. (GOOGL) was in 204 hedge fund portfolios at the end of the June quarter, while Viasat, Inc. (NASDAQ:VSAT) was in 13.
18. Anchorage Advisors
Assets Under Management: $26 billion
Anchorage Advisors was founded in 2003 by Kevin Michael and Ulrich's Anchorage Advisors with a focus on distressed securities, credit, and illiquid markets. Anchorage Capital, based in New York City, had received $100 million in seed funding from Reservoir Capital Group. Both founders previously worked in Goldman Sachs' distressed debt business before establishing Anchorage. The firm’s most notable transaction was a $500 million investment in MGM Studios to assist it in exiting Chapter 11 bankruptcy. The company also helped to restructure Lumileds, a lighting company. It had $1.13 billion in its 13F portfolio at the end of the June quarter. With a total investment of $148 million, SentinelOne, Inc. (NYSE:S) was its largest holding.
17. TCI Fund Management
Assets Under Management: $36 billion
TCI Fund Management was founded in 2003 by British billionaire Chris Hohn to generate funds for charitable purposes, particularly for children suffering from aids and other critical diseases. The firm also transfers funds to the Children's Investment Fund Foundation, a charitable organisation. Chirs Hohn, a Harvard Business School graduate, is regarded as an activist hedge fund investor. TCI Fund Management had $36 billion in assets under management and $33.66 billion in 13F securities at the end of the June quarter. Canadian National Railway Company (NYSE:CNI) and General Electric Company (NYSE:GE) were among its top stock picks. According to Insider Monkey data, Canadian National Railway Company (NYSE:CNI) was in 38 hedge fund portfolios as of the end of June and General Electric Company (NYSE:GE) was in 71.
16. Davidson Kempner
Assets Under Management: $37 billion
Davidson Kempner, which oversees $37 billion in assets, uses a multi-strategy and fundamental approach to investing. The firm invests in real estate, credit, and equity markets. It invests in both public and private markets. Davidson Kempner had $3.87 billion in the 13F securities portfolio at the end of the June quarter. Vistra Corp. (NYSE:VST) was one of Davidson Kempner's top stock picks.
15. Farallon Capital
Assets Under Management: $41 billion
After working at Morgan Stanley and Goldman Sachs, Thomas Steyer founded Farallon Capital in 1986 with a focus on investing in both public and private markets around the world. The firm manages equity capital for institutions such as college endowments, charitable foundations, pension plans, and high-net-worth individuals. As of the end of June, its $17.9 billion 13F portfolio was well-diversified across all sectors. IQVIA Holdings Inc. (NYSE:IQV) and TransUnion (NYSE:TRU) were among its top stock picks.
14. Viking Global
Assets Under Management: $42 billion
Viking Global was founded by Andreas Halvorsen. He is among the tiger cubs who worked with the legendary Julian Robertson. The firm manages approximately $42 billion in assets. Halvorsen has consistently been ranked among the top hedge fund managers in terms of earnings. Viking was founded in 1999 as a long-short hedge fund before switching to a long-only strategy. The firm has recently expanded into credit, private assets, and structured capital. As of the end of June, the firm had a $24 billion 13F portfolio, with Visa Inc. (NYSE:V) being one of its top stock picks. Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META) were also among its top stock picks.
13. Sculptor Capital
Assets Under Management: $45 billion
Sculptor Capital is one of the largest hedge funds in the world, with $45 billion in assets under management. It employs a variety of investment strategies, such as multi-strategy, credit, and real estate. The firm held $5 billion in its 13F portfolio as of the end of June 2023. Microsoft Corporation (NASDAQ:MSFT) and VMware, Inc. (NYSE:VMW) were among its top stock picks. Rithm Capital recently announced the acquisition of Sculptor Capital Management, putting an end to a feud between its founder Daniel Och, and Jimmy Levin.
12. Tiger Global Management
Assets Under Management: $58 billion
Chase Coleman's Tiger Global Management manages $58 billion in assets and $11.96 billion in 13F securities. Former Julian Robertson employees primarily invest in private and public technology companies. Coleman's firm raised the most capital in the venture capital industry between 2007 and 2017, according to the Preqin Venture Report. It generated $10.4 billion in profits for investors in 2022 and raised $12.7 billion for a new fund targeting early-stage companies. The firm's top stock picks, according to Insider Monkey data, include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOG), and NVIDIA Corporation (NASDAQ:NVDA).
11. D.E. Shaw
Assets Under Management: $60 billion
David E. Shaw, a former Columbia University faculty member with a doctorate from Stanford, founded the D.E. Shaw. The hedge fund is known for creating complex mathematical models to exploit market anomalies. It manages several investment equity funds targeting technology, real estate, wind power, financial services, and distressed companies. D.E. Shaw is one of the largest hedge funds in the world, with $60 billion in assets under management. Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), and Apple Inc. (NASDAQ:AAPL) were among its top stock picks as of the end of June.
10. Millennium Management LLC
Assets Under Management: $60 billion
Millennium Management, led by Israel Englander, is one of the largest hedge funds in the world, with $60 billion in assets under management. Since its inception, the firm has posted one of the highest gains by investing in multiple assets across multiple regions. It was founded in 1989 with an initial investment of $35 million. Its top stock picks as of the end of June were Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), and Amazon.com, Inc. (NASDAQ:AMZN).
9. Citadel Investment Group
Assets Under Management: $62 billion
Last year, billionaire investor Ken Griffin's $62 billion Citadel Investment Group earned $16 billion in profits for investors, bringing total earnings to $65.9 billion since its inception in 1990. The firm's multi-strategy flagship Wellington fund has returned 12.6% so far in 2023. Citadel was founded in 1990 by Ken Griffin, and it has over 2,600 employees. Its top stock picks as of the end of June included Microsoft Corporation (NASDAQ:MSFT).
8. Marshall Wace LLP
Assets Under Management: $64 billion
Marshall Wace LLP, which was founded in 1997, employs a variety of strategies when going long or short in equity, including quantitative and fundamental strategies. Paul Marshall and Ian Wace founded the London-based hedge fund. The hedge fund currently manages $64 billion in assets and $51 billion in the 13F portfolio. As of the end of June, Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOG), and NVIDIA Corporation (NASDAQ:NVDA) were its largest stock picks.
7. TWO Sigma Advisors
Assets Under Management: $70 billion
Two Sigma Advisors, founded by John Overdeck and David Siegel, is one of the world's largest hedge funds, with $70 billion in assets under management. Two Sigma, which was founded in 2001, employs a variety of technological methods for its trading strategies. Two Sigma held $39 billion in its 13F portfolio at the end of the June quarter, and its top stock picks include Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), and Apple Inc. (NASDAQ: AAPL).
6. Elliott Management
Assets Under Management: $73 billion
Paul Singer's Elliott Management, founded in 1977 with a seed capital of $1.3 million, has grown to become one of the largest hedge funds in the world, with $73 billion in assets under management as of the end of June. Paul Signer is a well-known activist hedge fund investor. His firm invests in underperforming companies and then advocates for changes to improve their performance. Elliott Management had $11.35 billion in its 13F portfolio as of the end of the June quarter, and its top stock picks include Marathon Petroleum Corporation (NYSE:MPC) and Pinterest, Inc. (NYSE:PINS).
According to Insider Monkey data, Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), Meta Platforms, Inc. (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOG), and Apple Inc. (NASDAQ: AAPL) were the top stock picks of hedge funds as of the end of June.
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Disclosure: None. 20 Largest Hedge Hedge Funds in the World and Their Top Stock Picks is originally published on Insider Monkey.
