Hedge funds will take about half of their profits as fees. DE Shaw, Millennium, and Citadel were the most profitable last year

Hedge fund fees have long been criticized for being high. A new study reveals the true cost to hedge fund clients. According to estimates from hedge fund firm LCH Investments, nearly half of the $3.7 trillion in profits earned by the industry since 1969 has been taken as fees by hedge funds. With the surge in assets, hedge fund fees have risen to 50.4% of profits, compared to about 30% in the early 2000s. Warren Buffett once described these fees as "incredibly compensation schemes," while Bill Gross, co-founder of PIMCO, referred to them as "massive extortion." Research firm HFR noted that the industry has grown sixfold this century, managing a record $4.5 trillion. "The financial crisis of 2008 provided hedge funds an opportunity to reset the way they charge investors," said Rick Sopher, chairman of LCH. D.E. Shaw & Co. became the most profitable hedge fund in 2024, followed by Izzy Englander's Millennium Management. Ken Griffin's Citadel Investment ranked third