When it comes to returns, 2013 will be best remembered as the fifth consecutive year in which the S&P 500, lead by Chief Risk Officer and Portfolio Manager Ben Bernanke (replaced by Janet Yellen in 2014 following a bumper 30%+ year), outperformed over 90% of all hedge funds, which as the recent beta blow up has shown, have virtually no original "alpha" ideas, and all merely piggyback on the same high beta "greater fool", hedge fund hotel trades and/or lever on beta as much as their Prime Broker will allow them (in many cases quite a lot).
And yet, hedge fund investors were perfectly happy to keep handing over 20% of their upside and paying a 2% management fee when they could have generated the same returns for free by simply buying the SPY ETF.
How happy?
According to a just released ranking by Institutional Investor magazine [6], The 25 top earners of 2013 raked in a total of $21.15 billion. That’s roughly 50 percent more than the 25 best-paid managers reaped in each of the previous two years. Four managers earned more than $1 billion, while a fifth just missed that distinction. To qualify for the list, a manager needed to have earned at least $300 million in 2013, or 50 percent more than the 2013 cutoff.
And despite the epic payday, these hedge fund executives may have handily beaten their take-home total for the previous year, but 2013 was hardly the most profitable year for the highest-earning managers as a group. The total earnings for the top 25 are only the fourth highest in 13 years, while their average combined earnings of $846 million are just the fifth-best showing.
Then again, when it comes to the Top 10 hedge fund managers, who all make more money in one year than they can spend in their lifetime, it is no longer about the money, but about bragging rights as the only thing bigger than the 20% performance fee is the PM's ego.
So in the annual ranking of the best paid hedge fund managers, in the top spot, paid a whopping $400,000 per hour amounting to a mindblowing $3.5 billion in 2013, is... well, here is the full list.
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