Bridgewater, Soros and Citadel top the 20 best performing hedge fund managers based on returns since inception, according to LCH’s annual ranking.

The 20 firms have made $500bn net of fees since inception, representing 45.6% of the $1.1trn generated by the industry, according to the FoHF’s Great Money Managers analysis.

The rankings are based on the firms’ returns in terms of dollars generated net of fees since inception.

The three top performers have kept their rankings intact. Combined, the firms provided $132bn net of fees to their investors since inception as of 31 December 2018.

Bridgewater’s net gains in 2018 were 8.1% net of fees, while the world’s largest hedge fund firm has gained $57.8bn since its 1975 inception.

Soros Fund Management ranked second, although its returns were frozen as of 2017 due to a change of investment approach following the retirement of founder George Soros.

Soros announced his retirement in 2011, but it wasn’t until 2018 that the investment approach deviated, according to Rick Sopher, chairman of LCH and CEO of Edmond de Rothschild Capital Holdings and author of the analysis.

Without considering 2018’s gains, Soros has returned $43.9bn to investors since its inception in 1973.

In third place is Ken Griffin’s Citadel, which returned 2.1% in 2018 and since its founding in 1990 has provided investors with net gains of $30.7bn.

Bridgewater, Renaissance Technologies, Two Sigma, DE Shaw and Citadel all generated significant gains, despite difficult markets, Sopher noted in the analysis.

These five firms, which generated net gains of more than $20bn in 2018, combined advanced technology with a set-up that can make money regardless of the direction of equity markets, according to Sopher.

LCH, launched in 1969, is the world’s longest-running FoHFs. The value of one LCH share bought at launch has multiplied by 140 times, officials say, representing a return of 10.6% per annum to 28 December 2018.

In its annual ranking, LCH calculates that the top 20 managers made $23.2bn net of fees for their investors last year, compared to net losses of $64.2bn for the remainder of the $3.1trn industry.

Hedge funds’ uneven returns last year were in stark contrast to 2017’s $182bn in net gains.

While hedge funds overall still experienced substantial losses, these strategies did offer some protection from broader stock market declines, with the MSCI World equity index falling by 10.4%, Sopher added.

“In 2018, the hedge fund managers who did best for their investors were typically the managers using systematic and trading approaches without taking significant equity market risk, so that results did not depend on the direction of equity markets,” he said.

He stressed that “exceptional” investment talent is rare, pointed out that it is often found in concentrated pools, such as with managers who held senior roles at Tiger Management.

Those with the illustrious Tiger pedigree include Steve Mandel of Lone Pine (ranked seventh) and Andreas Halvorsen of Viking (ranked eighth).

Tiger Management senior staffers have on a combined basis made gains of $101bn for their investors, Sopher said.

Another pool is of former Soros managers, which have made combined estimated net gains of $56bn for investors.

Soros and Tiger and their alumni account for 14.3% of the money made by all hedge fund managers since inception, by LCH’s calculations.

LCH, which managed $254m as of 31 December 2018, lost 11.5% last year, its worst return since 2011, when it returned -10.8%.

The FoHF had its best year in 1980, when it generated 64%. It has produced double-digit returns in 26 of the last 48 years.

Bridgewater, Soros and Citadel top LCH performance ranking on HFM InvestHedge.