2021 Survey of the Top 50 Hedge Funds

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For a copy of the unabridged 2021 Global Hedge Fund Survey, including extensive statistical information on each of the Top 50 funds, five manager profiles, and a Q&A with noted economist David Rosenberg, please contact Eric Uhlfelder at [email protected] or call 917.459.8408.

Hedge fund investing during the time of COVID-19 – Part II1

For the third year in a row, the top 50 hedge fund managers, relying on a variety of strategies, generated net returns comparable to the S&P 500 with significantly less risk and performance that was largely independent of the market. Hedged equity, multistrategy, and global macro funds led the way with more than half the funds in the top 50 managing less than $1 billion.


“The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.”

- F. Scott Fitzgerald

What a difference a year makes.

Last spring, this survey was focused entirely on what everyone felt: the world had suddenly changed. A deadly pandemic was metastasizing at warp speed across the planet.

Economies and societies locked down, unemployment soared, real interest rates turned negative, stocks collapsed, and the exponential spread of Covid-19 has led to more US deaths than tallied in all the major wars fought in the 20th and 21st century.

When central banks and governments unleashed unprecedented liquidity, investors looked past the trauma that was unfolding, which sent equity markets soaring. Further, the fear of cascading business failures hasn’t materialized. By the second half of 2020, investors decided nothing really had changed.

Economist David Rosenberg put the market recovery in simple terms. “Over the past 40 years, the difference between monetary and economic growth has been about 1%. In 2020, this spread gapped to around 30%. Excess liquidity that’s not being absorbed by the economy is finding a home in the financial markets.”

With economies reopening and pent-up demand unleashed, the growth outlook appears robust. In April, the International Monetary Fund projected global growth of 6% in 2021 and 4.4% in 2022.

The Economist magazine reported, “businesses are starting to invest in huge numbers. In America, capital spending is rising at an annual rate of 15%, both on hard stuff, such as machines and factories, and intangibles, like software. Firms in other parts of the world are also ramping up spending. Forecasts for business investment have never looked so rosy.”

While Giovanni D’Alesio, head of alternative investment research at the $132 billion Swiss-based asset manager GAM, is well aware of these trends, he believes, “equity fundamentals don’t make any valuation sense.” Broadly speaking, he sees multiple, not real earnings, expansion driving markets higher. As a result, “many investors are looking away from the essential indicators and more towards technical analysis and sheer momentum which isn’t sustainable,” explains D’Alesio.

Source: Yardeni Research, 16 June 2021

Uncertainty and volatility that characterized 2020 was a boon for many hedge funds. Last year’s Top 50 funds delivered collective returns that were in line with the market, but they did so with far less drawdown and volatility.

And this year’s Top 50, 33 of which made the leap from the 2020 survey, did even better. They averaged gains of more than 24% in 2020 versus the S&P 500 Total Returns of 18.40%. And they more than doubled the hedge fund industry average gains of 11.14%.

But making the cut for this survey involved more than having thrived last year. The Top 50 represented funds with the highest trailing 5-year annualized returns through 2020.