Top 20 Profitable Overseas Hedge Funds in 2023: TCI Takes the Lead, Followed by Citadel

With a net profit of $218 billion in the past year, overseas hedge funds have brought substantial returns to their investors.

According to the hedge fund ranking data released by LCH Investments, a FOF institution under the Rothschild family, the hedge fund industry generated nearly $218 billion in net profits in 2023, with the top 20 companies contributing $67 billion.

TCI Fund Management and Citadel, with profits of $12.9 billion and $8.1 billion respectively, topped the list. Taking TCI hedge fund as an example, it rose by 32.7% in 2023, far surpassing the S&P 500 index's 24.2% increase.

What's worth noting is that in 2023, the top 20 hedge funds not only had an average return rate of 10.5%, far exceeding the industry average of 6.4%, but also managed less than 1/5 of the industry's assets while generating nearly 1/3 of the industry's profits.

From a long-term perspective, the top 20 hedge funds have contributed 83% of the industry's overall profits in the past three years.

Rick Sopher, Chairman of LCH, commented:

"These leaders often have strong risk control capabilities and are good at seizing market opportunities, enabling them to pursue excess returns in the long term."

Sopher pointed out that the outstanding performance of these "money-making machines" is mainly due to their use of leverage levels far above the industry average. For example, Citadel, Millennium Management, and D.E. Shaw, these three companies managed only about 4.6% of the industry's assets at the end of 2023, but collectively generated $71.2 billion in profits over the past three years, accounting for 38.3% of the total profits of all hedge funds.

Sopher emphasized that despite the high leverage and high operating costs, some investors are still willing to "pay the bill" for these companies because of their attractive returns. High leverage enhances returns but also amplifies risks.

This trend has also raised concerns among regulators and investors, as the market worries about issues such as excessive use of leverage, market concentration, lack of diversity, and potential systemic risks.

Sopher stated:

"The sustainability of the risk models used by these hedge funds and their acceptance by investors and regulatory agencies are under scrutiny."

Here are the specific data of the top 20 hedge funds in the LCH Investments ranking:

Data source: LCH Investments, a FOF institution under the Rothschild family.