![]() ![]() They now “hold many of the cards and can exert pressure in areas like fees,” says Bensted. Is there any good news for investors? Yes. Failing to gain a Barron’s Penta ranking this year were perennial participants such as David Einhorn’s Greenlight Capital, David Tepper’s Appaloosa Management, Leon Cooperman’s Omega Advisors, and Larry Robbins’ Glenview Capital Management. It isn’t just the lesser-known firms that are falling short. This year’s reporting was assisted by Contributing Editor Michael Shari and Research Associate Gabriel Alpert. Funds are then ranked by their annualized three-year compound performance. Each firm is contacted to confirm the accuracy of the data and to gather information about its strategy. We also rely on industry contacts and other sources we deem reliable to report on firms that don’t file with the databases or won’t speak with us. Our search starts with information provided by three major hedge fund databases: BarclayHedge, Morningstar, and Preqin, which collectively sort through thousands of funds that meet our basic requirements. And to ensure that we are reporting the results of professionally run shops that offer stability and sufficient liquidity, funds must have at least $300 million in assets and a three-year track record as of Dec. Gold or energy funds are omitted, but diversified commodity trading advisors (diversified managed futures) are considered. We will include Asian-Pacific funds, for example, but not China-centric ones. We initially screen out narrow industries and small regions, excluding funds that invest in only one sector or country, and we avoid commodity-focused funds. How We Pick the Barron’s Penta Best 100 Hedge Funds “It will continue to be difficult for fund managers to raise capital, and keeping what you’ve got will be tough,” says Amy Bensted, head of hedge fund products at Preqin, a London-based alternative-asset research firm. That makes it harder for hedge funds to refill their coffers. Among the big institutional investors to announce that they would curtail hedge fund investments last year wereĪmerican International Group, and the New Jersey State Investment Council. Pension funds and financial institutions are seeking incremental returns to meet their own obligations many funds simply aren’t delivering them. The low and volatile returns are having an adverse effect on clients. The average return of the 100 funds on 2017’s list is 11.78%, versus nearly 17% a year ago. 2 finisher Mangrove Partners’ 51% gain, hedge fund performance continues to disappoint. In one of many cases of rapidly changing fortunes, a fund we monitor, Mudrick Distressed Opportunity, posted an impressive 39% gain in 2016, following a 26% drop in 2015, preventing it from making our ranking, which is based on three-year returns.ĭespite some spectacular 2016 returns like our No. Reflecting the difficulty of generating consistent returns in recent markets, a record 61 firms on the Barron’s Penta Top 100 list this year didn’t rank a year ago. 18 and 32) and Ken Griffin’s Citadel (Nos. 6 and 24) math-and-science talents John Overdeck and David Siegel’s Two Sigma Investments (No. Other quant-based firms whose various funds again excelled this year include a Donald Trump favorite, Robert Mercer’s Renaissance Technologies (Nos. Barron’s Penta’s champ a year ago, Hong Kong–based Parametrica Asset Management, guided by Xiongwei Ju, who holds a doctorate in finance, uses an equity market-neutral strategy based on statistical arbitrage across many global markets. It borrows heavily from private equity’s tool kit to work with managements to improve results.Īnother distinction: The asset manager and its key fund take an active, fundamental approach in an era when quantitative investing is booming among leading hedge funds. The small fund doesn’t sell stocks short, use leverage, or employ confrontational tactics to get its way. (See related story, “ The Winner’s Picks.”)Īlantra and its hedge fund stand out from the hedge fund crowd in a lot of ways. To learn more about Alantra and EQMC’s strategy, read our profile of and interview with Alantra CEO Jacobo Llanza and the fund’s overseer, Francisco de Juan. EQMC’s gains were nearly three times those of the surging Standard & Poor’s 500 index. In contrast, the average hedge fund’s annualized three-year return didn’t quite reach 3% in that time, according to BarclayHedge’s return database. ![]() There’s one mark, however, that would catch any investor’s eye: performance.Īmid wildly erratic hedge fund results, our victor, Madrid-based Alantra Asset Management’s $390 million EQMC Europe Development Capital fund (Class A), posted a 26% annualized return net of expenses from 2014 through 2016. The winner of Barron’s Penta’s 2017 ranking of the Top 100 Hedge Funds doesn’t tick a lot of the boxes for the typical big investor. ![]()
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