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What Are Hedge Fund Managers and What Do They?

What are Hedge Fund Managers?  

Hedge Fund Managers are individuals who manages hedge funds which are (investment funds that pools capital from accredited investors or institutional investors and invests in a variety of assets, often with complicated portfolio-construction and risk management techniques in an effort to make a positive return on investment).   

Hedge Fund Managers are often the owners of the fund, most of them have some of their own money invested also.  Hedge Fund Managers  make their money with A “2 and 20” annual fee structure. A Management fee of 2% of the fund’s net asset value and a Performance fee of 20% of the fund’s profits which has become standard practice among hedge funds.

An Example of a 2% Management fee would be if a Hedge Fund has received $100 million from Investors.  The Hedge Fund would charge 2% of that amount which would be $2 million, use that money to pay expenses, salaries, rent, and etc. These fees are charged regardless of the Performance of the investments under their Hedge Fund Managers. 

An Example of a 20% Performance fee would be if the Hedge Fund made a profit of lets say, $20 million. The Hedge Fund Manager would charge 20% of $20 million which would be $5 million, and use that for staff salaries, administrative and office expenses. These fees are only charged when a profit is made past a  certain threshold level. 

Top Hedge Fund Managers hold some of the most well-paid positions in any industry, far outpacing CEOs of major companies. Some of the highest-grossing managers make close to $4 billion a year, and some don’t make nearly that much, because if they fail to make a profit they will not get paid a performance fee.

The Top Most Successful and Power Hedge Fund Managers who happen to be Billionaires is as follows:

  1. Bill Ackman  CEO of Pershing Square Capital Management
  2. Steven A. Cohen  Founder of Point72 Asset Management and SAC Capital
  3. Chase Coleman  Founder of Tiger Global Management
  4. Ray Dalio  Founder of Bridgewater Associates
  5. Ken Griffin   Founder and CEO of Citadel
  6. Paul Tudor Jones  Founder of Tudor Investments and Robin Hood Foundation
  7. Daniel Loeb  Founder and CEO of Third Point
  8. Paul Singer Founder and Co-CEO of Elliott Management
  9. Jeffrey Smith  CEO of Starboard Value
  10. Donald Sussman  Founder and CIO of Paloma Partners