Money Managers Earning Way More Than Top CEOs

Top-earning hedge fund managers are raking in boatloads of cash. What does it mean for you?

Better Investing

Individuals who have made the list of the world’s top-earning hedge fund managers published annually by Institutional Investor’s Alpha magazine have raked in $192.5 billion over the past 15 years.

Last year alone, the two top-earning managers made $1.7 billion each.

The annual ranking, released this week, lists the top 25 earners based on the money managers’ capital in their funds and their share of the fees.

To make the latest list, a hedge fund manager had to earn at least $135 million last year.

That means that these titans of the hedge fund industry “massively outdid” their counterparts in the banking industry, CBS MoneyWatch reports. JPMorgan Chase CEO Jamie Dimon earned a mere $25 million last year, and Goldman Sachs CEO Lloyd Blankfein followed with $23 million.

In fact, the top-earning hedge fund managers outdid every CEO in America’s 500 biggest companies, according to Forbes. The magazine reports that the highest-paid CEOs last year were John Hammergren of McKesson Corp., who earned $131.2 million, and Ralph Lauren of Ralph Lauren, who earned $66.7 million.

So what do billionaire and multi-millionaire hedge fund managers have to do with you?

They serve as a reminder of the fees that most financial advisers and money managers rake in at the expensive of individual investors.

That’s a lesson that billionaire Warren Buffett, the famed investor and CEO of Berkshire Hathaway, sought to remind us of when he made a 10-year bet against a hedge fund firm back in 2008.

Buffett bet $1 million that an unmanaged stock mutual fund seeking to simply mirror the performance of the Standard & Poor’s 500 stock market index, or S&P 500, would outperform a hedge fund portfolio after accounting for fees, costs and expenses.

As of Dec. 31, 2015, Buffet’s index fund was ahead of the hedge fund firm’s portfolio by more than 40 percent. To learn more, check out “3 Lessons From Buffett’s Million-Dollar Wager.”

According to Institutional Investor’s Alpha, the 10 top earning hedge fund managers of 2015 were:

  • Kenneth Griffin of Citadel: $1.7 billion
  • James Simons of Renaissance Technologies: $1.7 billion
  • Raymond Dalio of Bridgewater Associates: $1.4 billion
  • David Tepper of Appaloosa Management: $1.4 billion
  • Israel “Izzy” Englander of Millennium Management: $1.15 billion
  • David Shaw of D.E. Shaw Group: $750 million
  • John Overdeck of Two Sigma Investments: $500 million
  • David Siegel of Two Sigma Investments: $500 million
  • O. Andreas Halvorsen of Viking Global Investors: $370 million
  • Christopher Hohn of Children’s Investment Fund Management (U.K.): $300 million
  • Joseph Edelman of Perceptive Advisors: $300 million

What do you make of hedge fund managers’ earnings? Share your thoughts below or on our Facebook page.

Stacy Johnson

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