While at a glance, hedge funds can seem like a distant and convoluted concept, in reality, they have simply pooled investment funds that utilize client money to either beat out the current market or provide a protective barrier (hedge) against unforeseen market changes.
Overall, with upwards of 3,600 hedge funds registered in the US alone, and the top 15 of those having almost 600 billion assets under management (AUM), there’s an awful lot of money being invested into these firms.
So who are the largest hedge funds in the country? To answer that, we’ve assembled a list of the 10 largest hedge funds in the United States, based on the 2022 reports of their assets under management.
Note: This list is based on assets in private funds that follow hedge fund strategies. Therefore, some organizations that provide a variety of financial services, like BlackRock, are not on this list, even though their total AUM is much larger.
Bridgewater Associates
Headquarters: Westport, Connecticut
Assets Under Management: $126.4 billion
Earning their place as the largest hedge fund in the United States, Bridgewater Associates employs roughly 1,500 and serves mostly institutional clients. Overall, they handle and work with pensions, endowments, charitable foundations, foreign governments, and central banks.
Though this hedge fund firm’s headquarters is currently in Westport, Connecticut, it was originally founded in New York City. Being founded in 1975, Bridgewater’s AUM has grown significantly enough to land the number one spot in only 46 years.
At the moment, this company offers the following funds:
Pure Alpha. This fund specializes in investment strategies.
Pure Alpha Major Markets. This fund is a subset of Pure Alpha and focuses mainly on various opportunities Pure Alpha invests in.
All Weather. This fund specializes in asset allocation strategies.
Optimal Portfolio. Generally speaking, this fund is a version of the All Weather fund with active management.
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Renaissance Technologies
Headquarters: East Setauket, New York
Assets Under Management: $73.5 billion
Utilizing mathematical and statistical analyses, Renaissance Technologies has developed quantitative models that advise their trading, investments, equities, futures contracts, forward contracts, and exchanges.
The company’s methods are extremely secretive, which is part of the reason they’re so successful.
Founded in 1982 and maintained by computer scientists, Renaissance Technologies has returned an impressive 39% of their after fees over a 30-year span (1988-2018), and currently returns more than 66% annualized before fees.
For a somewhat small firm with only 300 employees, this is an incredible return rate.
Millennium Management
Headquarters: New York City, New York
Assets Under Management: $55.0 billion
Founded in 1989, Millennium Management currently employs approximately 2,800 people and provides services across North America, Europe, and Asia.
Overall, this firm is made up of around 200 investment teams that offer voluntary advising services for private funds.
Citadel Securities
Headquarters: Chicago, Illinois
Assets Under Management: $53.0 billion
Citadel LLC is a Chicago-based multinational hedge fund founded in 1990. Interestingly, this firm was conceived by Kenneth Griffin, who was a 19-year-old Harvard student at the time. As a sophom*ore, he began trading convertible bonds.
Today, Citadel LLC is known to prioritize equities, fixed income, commodities, credit, and quantitative strategies. The company employs roughly 1,400 employees and maintains offices throughout North America, Europe, and Asia.
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D.E. Shaw Co.
Headquarters: New York City, New York
Assets Under Management: $47.9 billion
Founded in 1988, D.E. Shaw Co. is another firm that utilizes sophisticated mathematical models and computer programs to gauge when market anomalies will occur, and when they should invest. This company employs 1,400 people.
D.E. Shaw Co.’s success can be seen in the fact that from the beginning, the company has consistently delivered the fifth-highest returns on investment in the world.
Being highly reliant on mathematics and programming, D.E. Shaw Co. is also known for several educational programs. Some of these include: the American Regions Mathematics League, Worldwide Online Olympiad Training (WOOT), and the International Mathematics Olympiad, to name a few.
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Two Sigma
Headquarters: New York City, New York
Assets Under Management: $41.0 billion
Two Sigma Investments applies artificial intelligence, machine learning, and distributed computing to their investment strategy. Founded only 20 years ago in 2001, the company has had a tech-centered approach to investing since its conception.
Currently, Two Sigma Investments employs 1,600 people and maintains offices across North America, Europe, and Asia. The company is noted as having a higher rate of return compared to some older firms.
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Davidson Kempner
Headquarters: New York City, New York
Assets Under Management: $37.5 billion
Davidson Kempner Capital Management is an institutional alternative investment management firm, with a heavy focus on hedge funds. The company manages 347 employees across five offices in New York City, London, Dublin, Hong Kong, and Philadelphia.
Typically, Davidson Kempner focuses on a bottom-up approach to investing. Their gravitation towards fundamental analysis leads them to regularly invest in merger arbitrage, distressed investments, equity, convertible bonds arbitrage, bankruptcies, and credit.
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Farallon
Headquarters: San Francisco, California
Assets Under Management: $37.4 billion
Founded in 1986, Farallon Capital is an American investment firm that currently employs 165 professionals, and maintains offices in the United States, Brazil, Japan, Singapore, Hong Kong, and the UK. This firm mainly manages capital for clients such as university endowments, foundations, and other wealthy individuals.
Hitting a high point in 2005, Farallon claims to have formulated a commonly-used model that focuses on potential and risk-adjusted returns, known as absolute return investing. However, this claim is likely not 100% accurate, seeing as the practice dates back to as early as 1949.
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AQR Capital Management
Headquarters: Greenwich, Connecticut
Assets Under Management: $28.2 billion
AQR Capital Management is a major Connecticut-based investment firm with over 1,000 employees and locations in Boston, Chicago, Los Angeles, Bangalore, Hong Kong, London, Sydney, and Tokyo.
In general, AQR’s investments are driven by quantitative analysis, as well as predicted values and momentum, which they then use to create informed financial models.
AQR is well-known for its academic staff, with at least half of the company’s employees holding PhDs.
Maintaining an interest in education, the company partnered with the London Business School, and the two established The AQR Asset Management Institute in 2014. This school mainly focuses on valuable investment skills, such as asset management research and thought leadership.
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Anchorage Capital Group
Headquarters: New York City, New York
Assets Under Management: $27.1 billion
Based in New York City, Anchorage is a vulture fund that invests in distressed securities. The company was founded in 2003 by Goldman Sachs employees who worked in the distressed debt business.
Since that time, Anchorage has made many notable deals, including investments in MGM studios and J. Crew.
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Who is the largest hedge fund in the world?
The largest hedge fund in the world is Bridgewater Associates. With $126.4 billion assets under management, Bridgewater Associates is the largest hedge fund in the world. The second largest hedge fund in the world is Man Group, based in London, with an AUM of $73.5 billion.
What is a hedge fund vs mutual fund?
Mutual funds are offered to the public, while hedge funds are only available to accredited investors. This makes hedge funds private investments that will be treated differently than a mutual fund, which is available for daily trading. Hedge funds, meanwhile use many different strategies to increase their value.
