The Alpha Hedge Fund Hall of Fame

Fourteen men whose power and influence have helped to create a $2 trillion industry.

When it comes to sheer financial power and influence, the hedge fund industry has few rivals. Since 1990, hedge funds have grown from a $40 billion cottage business into a nearly $2 trillion global industry. Rarely does a day pass without a hedge fund manager or two making headlines for their latest exploits.

To honor the people behind this phenomenon, we have created the Alpha Hedge Fund Hall of Fame. The first 14 inductees have all had an outsize impact on the hedge fund industry, enjoyed spectacular long-term success and displayed tremendous originality, starting with Alfred Winslow Jones, the inventor of the modern hedge fund. James Simons is on a 20-year roll of 40 percent returns. Bruce Kovner made commodities trading a hot pursuit. George Soros’ larger-than-life adventures put hedge funds on the map, and Kenneth Griffin intends to ensure they stay there. Michael Steinhardt and Steven Cohen brought credibility to short-term trading. Paul Tudor Jones II is the macro trader writ large, Seth Klarman is the premier value sleuth, Leon Levy and Jack Nash pioneered the modern multistrategy fund, and Louis Bacon is the risk manager’s risk manager. Where they blazed trails, others followed — not least the “cubs” sent skittering into the investment world by Tiger Management Corp.’s Julian Robertson Jr. Some of the most influential figures aren’t managers at all, like Yale University’s David Swensen, who made the road less traveled acceptable.

Interview Transcripts:
June 24: Bruce Kovner, James Simons
June 25: Julian Robertson, George Soros, Michael Steinhardt
June 26: Kenneth Griffin, Seth Klarman, David Swensen
June 27: Steven Cohen, Leon Levy, Jack Nash
June 30: Louis Bacon, Alfred Winslow Jones, Paul Tudor Jones

Keep It Simple, Says Yale’s Top Investor

What should an individual investor do?

Don’t try anything fancy. Stick to a simple diversified portfolio, keep your costs down and rebalance periodically to keep your asset allocations in line with your long-term goals. That is the advice of David F. Swensen, who has run the Yale endowment since 1988, relying on a complex strategy that includes investments in hedge funds and other esoteric vehicles. The endowment earned 28 percent in its last fiscal year, which ended June 30, beating all other endowments. It finished the year with $22.5 billion.

“There is nothing that Cramer says that can help people make intelligent decisions,” Mr. Swensen said. “He takes something that is very serious and turns it into a game. If you want to have fun, go to Disney World.”

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A great investor with a centuries-long horizon

When he took over the endowment in 1985, it was worth slightly more than $1bn. By June 30 of last year, it had reached $18bn. The best performing US endowment in that time, it has easily beaten the S&P 500 over that period, with staggeringly low volatility.

During the bear market of 2001-2002, reports Peter Bernstein in his recently published book Capital Ideas Evolving, Yale rose by 10 per cent while the S&P dropped 30 per cent.

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Yale's Money Guru Shares Wisdom with Masses

Yale University recently announced a 23 percent return on its investments, swelling its endowment to a whopping $18 billion. The man behind that investment success is David Swensen, one of the most gifted investors in the world. He's made an average 16 percent annual return over 21 years -- better than any portfolio manager at any other university.

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