Sometimes you get more than you deserve, even if your clients don’t.
That’s clearly the case for many hedge fund managers who earned hundreds of millions of dollars or more even though their funds on average underperformed the S&P 500, according to the 2015 Rich List of the highest earning hedge fund managers from Institutional Investor’s Alpha magazine.
The 25 top earning hedge fund managers collected $11.62 billion in pay, but 12 of them had gains only in the single digits in 2014 when the S&P 500 rose 13.7%. Their average pay of $467 million, however, was down sharply from $846 million in 2013.
Last year was the sixth consecutive year when hedge funds on average underperformed the broader market. A composite index of 2,200 portfolio collected by HFR, which tracks the hedge fund industry, gained just 3% on average in 2014.
Leading the pack of highest earning hedge fund managers in the II Alpha survey is Ken Griffin, founder and CEO of Citadel, the hedge fund firm that recently hired former Federal Reserve Chairman Ben Bernanke as a senior advisor. Griffin earned $1.3 billion last year when Citadel gained 18.3%, besting the broader market. Other managers at the very top of the list also had funds with strong performance.