It's Official: 2016 Was A Brutal Year For Hedge Fund Managers

The appeal of investing in a hedge fund diminished as of late given hefty fees and much cheaper alternatives in the form of stock indices. Needless to say, this means that 2016 was a rough year for hedge fund managers.

According to a CNBC report, the 25 individual fund managers who made the most money last year made $9.4 billion. Granted, while this seems like a lot of money by any standard, it is barely half of what the same group made three years ago. Even at the peak of the financial crisis in 2008, the top 25 fund managers made $11.6 billion.

In fact, the 25th ranked fund manager made $130 million in 2016, the lowest minimum amount dating back to 2011. In addition, only two fund managers earned at least one billion dollars: Renaissance Technologies' James Simons made $1.6 billion and Bridgewater Associates' Ray Dalio took home $1.4 billion.

Hedge Funds Aren't Dying

Hedge fund managers operated through a difficult environment in 2016 although it may be hard to understand how this is the case given the S&P 500's total return of nearly 12 percent. Hedge funds overall measured by the HFRI Fund Weighted Composite Index, returned just 5.5 percent.

Yet at the same time, assets under management by hedge funds broke above the $3 trillion mark for the first time in 2016 — even though total redemption totaled $70.1 billion. This is possible as the overall positive returns countered the redemption and total capital increased by $121 billion last year.