Hedge funds often draw criticism from retail investors for failing to beat simple benchmarks like the S&P 500, and there is some truth to the claim. Many funds have struggled in the face of steep fees and the tailwind of a decade-long bull market that favored low-cost index investing.
But this line of argument misses the point. Hedge fund investors are not everyday stock pickers, but institutions like pensions, endowments, sovereign wealth funds and high-net-worth individuals bound by strict mandates and oversight.
For these investors, risk-adjusted returns matter more than raw outperformance. In other words, hedge funds are designed less to “shoot the lights out” than to smooth returns, diversify portfolios and preserve capital during downturns.
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History is full of examples of hedge funds that lost sight of this balance and collapsed into irrelevance after spectacular runs, from Long-Term Capital Management in the late 1990s to family office Archegos Capital in 2021.
The firms that endured and dominated built reputations not just on returns, but also on risk management, trust and marketing. Their prowess is reflected in assets under management (AUM), which measures the total capital discretionary managers can allocate on behalf of clients.
Pension & Investments conducts an annual survey of the top hedge funds by discretionary AUM, with the 2025 edition underway and the 2024 rankings still offering a useful snapshot.
Here are five of the top hedge funds today:
1. Bridgewater Associates.
2. Man Group.
3. Elliott Management.
4. Millennium Management.
5. Citadel.
1. Bridgewater Associates
Bridgewater Associates tops the list with $89.6 billion in AUM. Founded in 1975 by Ray Dalio, the firm has nonetheless experienced steady outflows over the past five years, losing about 32.1% of its capital base.
Bridgewater is best known for two flagship funds. The first is Pure Alpha, a global macro strategy that actively trades across asset classes, including equities, bonds, currencies and commodities, based on Bridgewater’s proprietary research into economic trends.
The second is All Weather, a risk-parity strategy that allocates across asset classes with the goal of performing in any economic environment. A retail-friendly variant of the latter is now available through a partnership with State Street Corp. as the SPDR Bridgewater All Weather ETF (ticker: ALLW).
Outside of Bridgewater, Dalio has built a reputation as both an author and commentator. His best-known book, “Principles,” lays out his management philosophy and decision-making framework, while other works like “The Changing World Order” and “How Countries Go Broke: The Big Cycle” articulate his macroeconomic views on debt, geopolitics and long-term financial trends.
Not all has been smooth sailing. In 2023, journalist Rob Copeland published “The Fund: Ray Dalio, Bridgewater Associates and the Unraveling of a Wall Street Legend,” which alleged a toxic work culture inside Bridgewater.
Critics argued that the firm’s principle of “radical transparency” had at times devolved into aggressive confrontations and micromanagement, sparking debate over whether the culture enabled excellence or dysfunction.
2. Man Group
Man Group ranks as the second-largest hedge fund, with $77.5 billion in AUM. Unlike Bridgewater, which has experienced outflows, Man Group’s asset base has expanded by 25% over the past five years, according to Pensions & Investments.
“Man Group is the James Bond of hedge funds; British, sleek, algorithmically suave and somehow still standing after two centuries (founded in 1783),” says Michael Ashley Schulman, chief investment officer of multi-family office Running Point Capital Advisors.
The firm is one of the few publicly traded hedge funds, listed on the London Stock Exchange as Man Group PLC (OTC: EMG.L). However, owning EMG stock is not equivalent to gaining exposure to the firm’s strategies. Shareholders are betting on Man Group’s ability to grow assets and earn fees, rather than directly participating in the returns of its funds.
Its investment framework rests on three pillars. The discretionary approach relies on human managers making judgment-based calls on markets. The systematic approach employs quantitative models and algorithms to identify and act on signals. The multi-manager platform allocates capital to a roster of independent investment teams within the firm.
From there, Man Group offers strategies in several categories. Long-only strategies target traditional asset appreciation. Private markets strategies include investments in real estate, infrastructure and private credit. Alternatives encompass hedge fund-style approaches such as long/short equity, event-driven, macro and volatility trading.
Finally, Man Group employs a “go anywhere” approach across asset classes, with strategies spanning equities, credit, real estate, commodities, currencies, volatility and multi-asset portfolios.
The firm also emphasizes technology and talent development, exemplified by its strategic partnership with the University of Oxford, which produces quantitative research and cultivates expertise in areas like machine learning and advanced data analytics.
3. Elliott Management
Elliott Management ranks third on Pensions & Investments’ list, with $69.7 billion in AUM. The firm has posted strong growth, with assets up 84.5% over the past five years and 182.6% over the past decade.
While activist investing is often associated with public spats such as the Carl Icahn-Bill Ackman fight over Herbalife, Elliott has built its reputation by executing similar strategies with greater consistency and often less spectacle.
“Elliott Management is the hedge fund equivalent of the house guest who not only rearranges your furniture, but also changes the locks and tells your family how to behave,” Schulman says.
Its playbook typically involves taking a meaningful stake in a company and then pressuring the board or management to unlock value. The tactics range from pushing for leadership changes to lobbying for divestitures or restructurings, to advocating for aggressive capital return programs.
Elliott’s methods are not limited to equities. The firm is adept at deploying capital into both distressed and non-distressed debt securities, where it can leverage its influence through creditor committees and restructuring negotiations. Event-driven arbitrage is another focus, with Elliott seeking to profit from mergers, spinoffs and other corporate actions where pricing inefficiencies may arise.
The firm has also drawn controversy. Sustainability research firm Corporate Knights published an exposé on founder, president, co-CEO and chief investment officer Paul Singer, highlighting how Elliott has maneuvered in recent years to slow the energy transition.
Rather than supporting decarbonization initiatives, Corporate Knights alleges that the firm has emphasized divestitures of green assets, reflecting its conviction that fossil fuels remain a better near-term source of returns for energy shareholders.
[Read: 7 Best ETFs for Private Equity and Private Credit Exposure]
4. Millennium Management
Millennium Management ranks fourth on Pensions & Investments’ list, with $67.9 billion in AUM. Like Elliott, it has benefited from major tailwinds, with AUM up 75.1% over the past five years and 193.2% over the last decade.
The firm is defined by scale. Millennium employs more than 6,300 people across 140 offices worldwide, executing on over 100 global exchanges. On an average day, its teams handle around 13 million trades spanning equities, commodities and fixed income, and they operate across 45 currency markets.
Its style can be described as “alpha by a thousand cuts.” This refers to a highly quantitative, algorithm-driven approach where the firm seeks to ruthlessly exploit small inefficiencies across virtually every asset class.
Instead of making concentrated directional bets, Millennium runs a hive-like operation, with multiple teams and strategies working simultaneously to capture incremental returns that add up at scale.
Though less frequently in headlines compared to peers like Bridgewater or Elliott, Millennium continues to make strategic-level moves. In June, the Financial Times reported that the firm was exploring the sale of a minority stake at a $14 billion valuation.
5. Citadel
Citadel ranks fifth on Pensions & Investments’ list, with $63.4 billion in AUM. It also stands out for its rapid growth, with AUM rising 96.7% over the past five years and 202% over the last decade.
The firm is highly quantitative, with a culture that embraces bold, unconventional bets on talent irrespective of background. Recently, Citadel made headlines by hiring Kairan Quazi, a 16-year-old prodigy who previously worked as an engineer at SpaceX, now serving as a developer.
The quantitative angle is central to Citadel’s success. The firm invests heavily in technology, data infrastructure and algorithmic research, recognizing that even small informational or execution advantages can be magnified at its scale.
Founder Ken Griffin is both a Wall Street icon and a prominent public figure. Beyond his frequent media appearances to share macroeconomic views, Griffin is active in philanthropy through his Griffin Catalyst initiative, which funds projects in education, medicine and community development.
He is also known for high-profile personal purchases, including a $43.2 million first edition copy of the Constitution in 2021 and a $44.6 million stegosaurus fossil in 2024.
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5 of the Top Hedge Funds in 2025 originally appeared on usnews.com
Update 09/03/25: This story was published at an earlier date and has been updated with new information.
