It paid to be a top-performing hedge fund manager in 2011—very, very well for the some of the biggest names in the industry, in fact.
Bridgewater Associates founder Ray Dalio was named the highest-paid hedge fund manager of the year by Forbesmagazine’s annual list of the 40 best-paid hedgies, which estimates that Dalio earned $3 billion last year. And he did earn it: Bridgewater returned about 20% in 2011, the second-worst year on record for the hedge fund industry.
Two other hedge fund managers—both now technically retired—also took home more than $1 billion last year. Renaissance Technologies founder James Simons brought in $2.1 billion even though he stepped down from day-to-day management of the firm two years ago. (His successors, Peter Brown and Robert Mercer, also made the list with a 2011 payday of $125 million. Likewise, two of Dalio’s deputies at Bridgewater, Greg Jensen and Robert Prince, were among the 40 with earnings of $70 million each.) Carl Icahn, who returned all outside capital in his hedge fund last year, made $2 billion.
After the top three, there’s a steep drop-off in the paycheck department. SAC Capital Advisors’ Steven Cohen is fourth on the list, but made just $600 million last year, less than one-third Icahn’s payday.
Trading Game
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get paid a motza when the market goes your way. Get paid a slightly smaller motza when it doesn’t
Its a great scam. Manage 100k make 20% get $20k.
Manage $1 billion make 20% and take 20% of that – go home with $40 million.
Same return vastly different result – and you are not risking any of your own money.