How Bloomberg calculated the income of top hedge fund managers

(Bloomberg) – Bloomberg’s rankings of hedge fund manager earnings show the top 15 individuals earned about $15.8 billion last year.

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The list used Securities and Exchange Commission filings, company websites and news reports to determine assets under management. These numbers are for early 2021 and do not include asset inflows and outflows over the past year.

Fee details were taken from filings and regulatory reports. In the absence of disclosure, Bloomberg assumed a 2% management fee and a 20% performance fee. Management fees are not included in profits.

Some companies manage dozens of individual funds and strategies. Bloomberg’s analysis includes only the largest and most important hedge funds and long-only within investment firms.

Some hedge fund managers hold significant assets outside of the traditional hedge fund business, including venture capital or low-fee strategies, which are also not included in the analysis.

Information on how much each hedge fund owner invests in their own funds comes from SEC filings, reports, and calculations made previously for the Bloomberg Billionaires Index. Company ownership percentages are based on regulatory filings and reports. Fictitious stakes in companies can mean that ownership is overvalued.

Gross performance fee figures are estimated using previously reported annual performance data for funds in the analysis and filings. In most cases, Bloomberg assumes that half of the performance fees were distributed to employees and reinvested in the company, with the owners receiving the other half. Information on the 2021 annual performance of the Medallion Fund managed by Renaissance Technologies was not available. Its performance was estimated from its 10-year performance average.

Recovered losses from previous years are excluded from the calculation of managers’ personal investment returns, and performance fees are calculated to reflect estimated high points. Several of the year’s best performing hedge funds did not make the list because they have yet to recoup losses incurred in previous years. There are also large hedge fund companies for which no performance data is available.

Hedge funds must manage funds for external clients in order to be included in the list.

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