Hedge funds are alternative investments that use various methods such as leveraged derivatives, short-selling, and other speculative strategies to earn a return that outperforms the broader market. Hedge funds invest in domestic and international markets alike. They ordinarily impose investment minimums of hundreds of thousands of dollars to millions of dollars and target high-net-worth individuals, pension funds, and institutional investors.
As a result, hedge funds invariably convey higher risks than traditional investments. They are not subject to the same regulations as common funds and may not be required to file reports with the U.S. Securities and Exchange Commission (SEC).
1. Citadel
Citadel is based in Miami and focuses on five strategies. These are (1) commodities, (2) credit and convertibles, (3) equities, (4) worldwide fixed income and full scale, and (5) worldwide quantitative strategies.
In 1987, founder Kenneth Griffin began trading from his dorm room as a 19-year-old sophomore at Harvard University. He founded Citadel in 1990 and is currently the CEO and Co-Chief Investment Officer.
2. Bridgewater Associates
Bridgewater Associates is based in Westport, Conn., and provides services to pension funds, foreign governments, central banks, university endowments, charitable foundations, and other institutional investors. Co-seat and co-chief investment officer Beam Dalio founded the firm in 1975 from his two-bedroom New York apartment.
3. AQR Capital Management
AQR Capital Management is based in Greenwich, Conn., and uses quantitative analysis to develop its strategies focused on equities and alternatives. The firm offers its strategies using investment vehicles and registered funds.
Precipice Asness founded the organization alongside partners John Liew, Robert Krail, and David Kabiller. The four had worked together on a hedge fund at Goldman Sachs. AQR launched its Absolute Return fund in 1998.89
4. D.E. Shaw
D.E. Shaw was founded in New York City in 1988. The company’s founder, David E. Shaw, received his Ph.D. from Stanford and was in the workforce of the Computer Science Department at Columbia University before starting D.E. Shaw. While still involved in strategic decisions, his essential role is chief scientist.
The company’s systematic strategies are quant based and focus on alternative investments and long-oriented investments.
5. Renaissance Technologies
Renaissance Technologies is a New York-based quantitative hedge fund that uses mathematical and statistical methods to uncover technical indicators that drive its automated trading strategies. Renaissance applies these strategies to U.S. and international equities, debt instruments, futures contracts, forward contracts, and foreign exchange.
Mathematician Jim Simons founded Renaissance Technologies in 1982. Forbes lists Simons as the 51st wealthiest person in the world as of June 14, 2023, worth $28.1 billion. Mathematician Peter Brown is the current chief executive.
6. Two Sigma Investments
Two Sigma Investments is based in New York and was founded by John Overdeck and David Siegel in 2001. The organization uses quantitative analysis to build mathematical strategies that rely on historical price patterns and other data.
As of Walk 31, 2023, Two Sigma Investments had $70.8 billion under management.
7. Elliott Investment Management
Elliot Investment Management has a multi-strategy trading approach focused on equities, private equity, private credit, distressed securities, non-distressed, real estate, and commodities.
In Aug. 2019, Elliot acquired book retailer Barnes and Noble. It had earlier acquired British bookseller Waterstones. The organization is based in New York and was founded by Paul Singer in 1977.