The rankings, issued by Institutional Investor’s Alpha magazine, offers 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 Alpha. 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, chief executive 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, the chief executive 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 Alpha.
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.”
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