NEW YORK — Wall Street’s elite club of hedge fund managers got a bit richer last year, according to an annual ranking published this week. The top two hedge fund managers made $1.7 billion each in 2015, and the top 25 averaged 10 percent more than last year.
The rankings, issued by Institutional Investor’s Alpha magazine, offer a rare peek inside the world of hedge fund managers, who can make massive bets on stocks or bonds and walk away with billions in profits.
The top five hedge fund managers made more than $1 billion each last year. The top 25 hedge fund managers made a combined $12.94 billion, according to Institutional Investor’s Alpha magazine. Among the top 25 hedge fund managers, the average pay was $517.6 million. Only one woman ranked among the 50 highest-paid executives.
That puts the leaders of the hedge fund industry, a secretive and lightly regulated group, well ahead of banking executives, who have been put under greater scrutiny since the 2008 financial crisis.
Jamie Dimon, CEO of the largest bank in the country, JPMorgan Chase, made a relatively measly $25 million last year by comparison. Another frequent target of Wall Street critics, Lloyd Blankfein, CEO of Goldman Sachs, made $23 million in 2015.
Meanwhile, the hedge fund industry has doubled in size over the past decade, and executives are bringing in high pay despite weathering a tough year in the financial markets.
Dan Loeb, the head of Third Point, a large and well-known hedge fund, said in a letter to investors last month that the industry is in the “first innings of a washout.”
Five hedge fund managers made enough to rank among the industry’s highest paid despite losing money in at least one of their funds in 2015, according to Institutional Investor.
The industry is a frequent target of critics who say the world’s wealthiest financiers are benefiting from a broken U.S. tax code. Hedge fund managers’ profits are treated as long-term capital gains, which means they’re taxed at no more than 15 percent.
Critics say those earnings should be taxed as ordinary income, or as much as 39.6 percent. Even Republican presidential candidate Donald Trump has called for an end to the discrepancy, saying “hedge fund guys are getting away with murder.”
“There’s absolutely no justification for promoting this activity through reduced tax rates,” said Bart Naylor, a financial policy advocate for Public Citizen.
Just last month, U.S. regulators proposed rules to overhaul how Wall Street executives are paid, addressing years of complaints that excessive bonuses helped lead to the 2008 financial crisis. But hedge funds, which have grown into a nearly $3 trillion industry, are not expected to be significantly affected by the rules, industry experts have said.
The only woman on Alpha’s list, Leda Braga, founded Systematica Investments in January 2015 and made $60 million last year. Braga ranked 44th among the top 50 hedge fund managers listed in the ranking.
