How Bloomberg Calculated the Top Hedge Fund Managers’ Income

(Bloomberg) -- Bloomberg’s ranking of hedge fund manager income shows that the top 15 individuals earned about $12.4 billion last year.

Bloomberg used Securities and Exchange Commission filings, company websites and news reporting to determine assets under management. Those figures are for the start of 2019 and don’t include asset inflows and outflows during last year.

Fee details were taken from SEC filings and reporting. Where there was no disclosure, Bloomberg assumed a 2% management fee and 20% performance fee. Management fees aren’t included as part of the profits.

Some firms run dozens of individual funds and strategies. In general, Bloomberg’s analysis only includes the largest and most material funds within the investment firms.

Some hedge fund managers hold significant assets outside of traditional hedge fund activities, including venture capital or low-fee strategies, which also aren’t included in the analysis.

The information on how much each hedge fund owner had invested in their own funds comes from SEC filings and calculations done previously for the Bloomberg Billionaires Index. Ownership percentages of firms are based on regulatory filings and reporting, and phantom equity interests in firms may mean ownership is overstated.

Gross performance fee figures are calculated using annual return data for funds in the analysis. In most cases, Bloomberg assumes that half of the performance fees were distributed to employees and reinvested in the firm, with the owners collecting the other half.

Losses recouped from previous years are excluded when calculating returns on managers’ personal investments, and performance fees are calculated to take into account estimated high-water marks. Several of the year’s best performing hedge funds don’t appear on the list because they have yet to recoup losses incurred in previous years. There are also large hedge fund firms where no return data is available.

Hedge funds must manage funds for external clients to be included on the list.

To contact the editor responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net

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