Insider Monkey

20 Highest Paid Hedge Fund Managers of All Time

Ramish Cheema
10 min read

In This Article:

In this piece, we will take a look at the 20 highest paid hedge fund managers of all time. If you want to skip our analysis of the hedge fund industry and why 2022 was a crucial year for the sector, then head on over to 5 Highest Paid Hedge Fund Managers of All Time.

The hedge fund industry is one of the most lucrative sectors out there. It primarily involves financial firms that use leverage to make big bets on the stock market - a risky gambit that carries the promise of massive payouts should the investments turn out to be winners but equally big losses should the tides of fate turn against them.

The latter part of the hedge fund proposition came into full effect last year. 2022, after 2020, was one of the most tumultuous years on the stock market as the chickens of the coronavirus fiscal policy came to roost and were injected with steroids through the Russian invasion of Ukraine. During the pandemic, central banks all over the world slashed interest rates to ensure that their economies do not collapse in the wake of greater movement restrictions and stay at home requirements. At the same time, governments opened their wallets and deposited generous stimulus checks into eligible accounts to ensure that most people can keep up with the costs of living during an economic crisis. As they say, the road to hell is paved with good intentions, and these decisions had the natural effects of injecting too much money into the economy and beefing up spending. This, then, led to historic inflation last year, which was compounded by a disruption in the energy markets that led to high energy costs.

So why is this relevant to the hedge fund industry? Well, to compensate for their earlier actions, central banks started raising interest rates effectively, with the sole aim of slowing down economic growth to curtail inflation. This caused major stock markets to shed double percentage digits in value and ended up dealing hefty blows to some of the biggest hedge funds in the world. As 2022 ended, the hedge fund industry had bled a whopping $208 billion, and the tumble sent shivers down major firms. These losses were not distributed heavily, however. The hardest hit hedge fund last year was Chase Coleman's Tiger Global which alone accounted for close to one tenth of the entire industry's losses.

Tiger Global's portfolio, which is the sum of all its investments in stocks or exchange traded funds, was worth $45.9 billion at the close of 2021, saw a series of dizzying drops throughout the year that would make the rest of us lose our hair. As the first quarter ended, the fund's portfolio was worth $26.6 billion, by the end of the second quarter it had dropped to $11.9 billion; and as if this wasn't enough, its third and fourth quarter closing values had stood at $10.8 billion and $8.1 billion, respectively. The fund's literal fall from heaven is the biggest case study of the hedge fund industry in recent times as it illustrates that just like the funds can soar to billions of dollars in the blink of an eye, their downfall can be equally, if not more, quicker.

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