Top 10 hedge fund specialists and how they diversify

Top 10 hedge fund specialists and how they diversify
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The world’s hedge fund specialists have begun diversifying outside hedge funds, although most of the top 10 firms have limited their diversification outside of them. HFM Insights compiled a list of the top 10 hedge fund specialists and how much they have diversified beyond hedge fund products.

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Q3 2020 hedge fund letters, conferences and more

Top 10 Hedge Fund Specialists

  1. Marshall Wace

Marshall Wace markets itself as a global alternative asset management firm “with a philosophy of entrepreneurship and a history of innovation.” The firm specializes in long/ short equity, combining fundamental investing with systemic and quantitative strategies.

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According to HFM Insights, Marshall Wace has about $34 billion of its $45 billion in assets under management in hedge funds and hedge fund products. It allocates a small percentage of its assets to long-only non-hedge fund products and the remaining percentage into what HFM categorizes as “other” products.

  1. Hillhouse

Hillhouse Capital is focused on East and Southeast Asia. It was founded by Lei Zhang in 2005 with a private equity focus. Among the firm’s earliest investments are Tencent and, two of its most profitable investments.

HFM reports that Hillhouse has $55 billion in assets under management, and of that total, $35 billion is in hedge fund products, while $20 billion is in private equity.

  1. Elliott Management

Elliott is one of the oldest hedge fund firms under continuous management, and it’s known for its activist investments. The firm takes an opportunistic trading approach and creates and identifies value through a value-added global investment approach.

According to HFM, Elliott Management has about $38 billion of its assets under management in hedge fund products and the remaining $2 billion in private equity.

  1. Millennium Management

Millennium invests across sectors, asset classes and geographies. Its four main strategies are relative value fundamental equity, equity arbitrage, fixed income and quantitative. Millennium states that it takes a measured and thoughtful approach in its investment and operational activities.

HFM reports that Millennium has all of its $40 billion in assets under management in hedge funds and hedge fund products. The firm reports on its website that it has over $48.5 billion in assets under management, however.

  1. D.E. Shaw Group

D.E. Shaw is a global investment and technology development firm. It’s a pioneer in quantitative investing but also has expertise in fundamental analysis and active management strategies. D.E. Shaw uses a combination of quantitative and qualitative tools to locate hard-to-find sources of return in global public and private markets. The firm has a special area of focus in renewable energy.

According to HFM, D.E. Shaw invests $46 billion of its $57 billion into hedge fund products. It invests a small liver into private and alternative credit and infrastructure or real assets. D. E. Shaw reportedly invests a bigger chunk of its assets under management in long-only non-hedge fund products.

  1. Two Sigma Investments

Two Sigma is known for its scientific approach to investing, which uses data analysis to solve tough financial challenges. The firm utilizes technology and data science just as much as it does financial services principles. Machine learning and distributed computing play major roles in the firm’s investment selection process.

HFM reports that Two Sigma has $48 billion of its $61 billion in assets under management in hedge fund products. It has a small sliver of its assets invested in private equity and a larger chunk in HFM’s “other” category.

  1. Man Group

Man Group is an active investment management firm that utilizes technology in its decision-making process. The firm provides long-only, alternative and private markets products on a single and multi-manager basis. Man Group also develops bespoke solutions and hedge fund services using its technology, infrastructure and expertise.

According to HFM, Man Group has $50 billion invested in hedge fund products, $46 billion invested in long-only non-hedge fund products, and $15 billion invested in “other” products. It also has smaller amounts of assets invested in private and alternative credit and real estate.

  1. AQR Capital Management

AQR markets itself as working “at the nexus of economics, behavioral finance, data and technology.” The firm offers 40 diversified strategies across equity, fixed income and alternative investments. AQR follows three core principles in its investment philosophy, which are “fundamental investing,” “systemically applied” and “thoughtfully designed.”

HFM states that AQR has $71 billion invested in hedge fund strategies and $115 billion invested in long-only non-hedge fund products.

  1. Renaissance Technologies

Renaissance specializes in systemic trading uses quantitative models derived from statistical and mathematical analyses. Many have referred to the firm as not only one of the industry’s most successful but also one of its most secretive firms in the world. Renaissance’s signature Medallion fund has had the best record in investing history.

According to HFM, Renaissance has all $75 billion of its assets under management invested into hedge fund products.

  1. Bridgewater Associates

Number one on the list of the top 10 hedge fund specialists Ray Dalio’s Bridgewater serves institutional clients utilizing a global macro investing style based on economic trends. The firm started as an institutional investment advisory service and then moved into institutional investing. Bridgewater also pioneered the risk parity investment approach.

HFM reports that Bridgewater has $136 billion invested into hedge fund products and $24 billion invested into “other” products.

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