Trying to decide how to properly invest your funds for maximum profitability while mitigating risk as much as possible can be challenging. Each investor has a desired return on investment that he or she would like to see as well as a unique tolerance for risk. While there are considerable variations among investors in these two critical areas, many savvy investors are overwhelmingly turning to hedge funds as a financial vehicle to consider. You may be wondering what are the best hedge funds currently available. A closer look may help you determine how to properly invest your funds.
The Best Hedge Funds You Need to Know
A hedge fund sounds similar to a mutual fund. Actually, it does share some similarities. For example, it is a professionally managed fund that pools a very large amount of money from a group of investors. Like a mutual fund, a hedge fund also typically invests in a certain classification of investments. Therefore, it is possible to create a diversified portfolio through the strategic selection of hedge funds.
However, this is where the similarities between hedge funds and mutual funds end. Hedge funds are typically only available to accredited investors. They are set up as a limited partnership. Investors must place a large financial stake in the fund to participate. There is usually a lock-up period of at least one year with these funds. If you are interested in investing in this kind of asset, you may want to know what the best hedge funds available are and how you can get involved with some of them.
1. Renaissance Institutional Equities Fund
If you are looking for a fabulous return on investment from the best hedge funds, you need to take a closer look at the Renaissance Institutional Equities Fund. This popular fund is professionally managed by James Simon, chairman of Renaissance Technologies. At the end of 2016, it was up 21.6 percent after fees were netted out. Also, it controlled more than $15 billion in funds. This is a hedge fund that is a true moneymaker for its investors.
2. Pure Alpha Fund
Looking beyond this incredibly profitable fund at other options, the Pure Alpha Fund ranks as one of the best hedge funds available today. This is one of the largest funds managed by Ray Dalio’s investment firm, Bridgewater Associates. While the firm manages a total of $160 billion in assets, the Pure Alpha Fund has $1.4 billion in assets. This particular fund had a slow year in 2016. It netted only a 2.6 percent return for investors. However, many hedge funds had a similarly dismal performance this past year. Pure Alpha Fund should turn around quickly.
3. All Weather Fund
Another fund managed by Ray Dalio’s team at Bridgewater Associates is the All Weather Fund. This fund has a much stronger performance in 2016 with a net gain of 11.6 percent. It does not come close to the performance of the Renaissance Institutional Equities Fund. However, it does outpace the average stock return very well.
4. Pure Alpha Major Markets
One of the smaller funds managed by Ray Dalio’s hedge fund team at Bridgewater Associates is the Pure Alpha Major Markets hedge fund. This fund realized a net return of 12.9 percent in 2016. As with the other two funds, performance for this fund is expected to increase in the coming year as well.
5. Rokos Global Macro Fund
The Rokos Global Macro Fund is an excellent option for hedge fund investors to consider. This fund is managed by Christopher Rokos of Rokos Capital Management. This is a rather new firm founded by Rokos. He previously gained fame in the industry as a founding partner of the dominant Brevan Howard Asset Management Firm. The Rokos Global Macro Fund is the main fund for this firm. It manages $6 billion in assets. The fund returned a net profit of 20.6 percent for its investors in 2016.
6. Parametrica’s Global Master Fund
If you regularly look at a list of the best hedge funds each year, you may not recognize the Parametrica’s Global Master Fund by name. However, they had an astounding 30 percent net return over a three-year compounded period as of the last quarter of 2015. Therefore, this is a fund to pay attention to. It is the top fund on Barron’s list of best hedge funds. This company is a Hong Kong-based firm that is garnering a lot of attention in the industry.
7. VR Global
If you are the type of hedge fund investor who enjoys taking a risk with your funds, VR Global managed by Richard Deitz is a great fund to watch. This fund has made the Barron’s list seven times in the last decade. It largely profits off of troubled debt in secondary markets.
8. Element Capital
Another popular pick that has ranked highly in the world of best hedge funds over the last few years is the Element Capital fund managed by Jeffrey Talpins. Talpins gained fame in this industry by climbing his way up at Citibank and Goldman Sachs. This fund requires a minimum investment of $50 million in capital. Moreover, it has not disappointed investors since its launch in 2005. The fund has consistently ranked well. It is expected to perform well in the coming year.
The Horseman Capital hedge fund is professionally managed by Russell Clark. It has been a consistent performer since the fund was founded in 2001. In fact, between 2001 and 2015, the annualized return exceeded 14 percent. While this net figure includes two down years, the fund has performed well overall. It focuses primarily on Asian and G7 countries.
10. Citadel Partners Fund
Many up and coming hedge fund managers are vying to work for Citadel Partners, a firm managed by Ken Griffin. Griffin is a legend in this industry, and he focuses this particular fund on a multi-strategy process. It incorporates fixed income, commodities, macro, equities and more to produce a substantial gain for its investors. This is another fund that is consistently at the top of the list of best hedge funds available for investors to choose from.
11. Appaloosa Management Fund
A discussion of top hedge funds available would not be complete without taking a closer look at the Appaloosa Management Fund. This fund is managed by David Heppa, a savvy investment manager who has worked hard to make this fund a veritable household name in the world of hedge funds. This is a consistent fund with a solid return that any investor can feel confident investing in.
Hedge funds require investors to pledge a substantial amount of capital, so you certainly need to do your homework before making a financial decision. As with any type of investment, you should never pool all your funds in one investment basket. If the large nature of the investment required for a hedge fund would not yield a proper allocation of funds, you should consider investing in other types of funds until your portfolio grows to a more substantial level. Or you can consider investing in hedge funds that require less up-front investment capital.