Of course, there's no reason to think that the main use of hedge funds is to get above-equity-market returns. Presumably no one is investing with Ray Dalio, the creator of "risk parity" investing, because they want him to beat the S&P 500 in a bull market. You might very well invest in a hedge fund to reduce or diversify your risks, rather than to beat the stock market. And a billionaire who relies less on performance fees and more on his own capital might be just the guy to do that for you.
The New York Times article on the "best paid" managers goes on:
That collective payday came even as hedge funds, once high- octane money makers, returned on average low-single digits. In comparison, the benchmark Standard & Poor’s 500-stock index posted a gain of 13.68 percent last year when reinvested dividends were included.
Perhaps that's just a sign of maturity in the industry. The richest hedge fund managers have made a lot of money. Now they want to keep it.
Last year's effort is here. Methodology:
I used the top 10 just because they're in the ungated Institutional Investor's Alpha article, plus it's easier than doing 25. If they're not, it could be because (1) the manager is not fully invested in his fund, (2) the manager runs multiple funds and is invested in funds that are different from, or weighted differently from, the funds I use in the calculations, (3) my data is wrong, (4) etc. That is: Buffett owns 321,000 A shares of Berkshire Hathaway and just over 2 million B shares. They were worth $177,900 and $118.56 per share, respectively, at the start of 2014, and $226,000 and $150.15 at the end. That's a $15.5 billion change in wealth (from $57.35 to $72.85 billion). Buffett also got a $100,000 salary, which must have been nice for him. I owe the Buffett example to Nat Stewart on Twitter. Though of course he has a staff, and that staff is probably more levered to the fee scheme than the boss is. I mean, that's a general loss aversion model. Presumably actual billionaire hedge fund managers are less risk-averse than, say, I would be if you gave me a billion dollars.