Learn to Trade Like Top-Performing Hedge Fund Managers

Follow the Stocks Hedge Funds are Buying

TipRanks’ Top Hedge Fund Managers tool is an invaluable tool for improving your stock investing. Investors can use this tool to study the pattern of investing by the top-performing hedge funds, and emulate the most successful ones.

A hedge fund is a type of investment company that uses sophisticated investment techniques to generate profits for its clients. Hedge funds tend to attract high-net-worth individuals, due to their required minimum investment amount. It’s a good idea for individual investors to observe what the hedge funds are doing in pursuit of money; to invest like an expert, an individual investor can follow the tactics used by successful hedge fund managers.

This article shows you how to evaluate a hedge fund’s performance using TipRanks’ Top Hedge Fund Managers tool. To identify the most significant and biggest hedge funds in the world, we look broadly at the hedge fund sector. TipRanks ranks hedge fund managers according to their success rates, average returns, and statistical significance, so you can easily see which are performing the best. It’s simple to use TipRanks’ ratings to determine whom to follow.

By the way, TipRanks monitors more than 200 equity hedge funds and shows you the U.S. equities portfolios of those funds. On our website, you can keep tabs on each of these hedge funds and sign up for notifications anytime they reveal a new position. Here’s how you can invest like a pro, using this tool.

Top Hedge Fund Managers

Hedge funds must submit a form 13F to the SEC within 45 days of the end of each quarter if they invest more than $100 million in equity. In order to follow hedge funds’ performance, TipRanks uses proprietary algorithms to gather the information provided in all these filings.

TipRanks’ machine learning presents the data in an easy-to-read format. The data is shown in a sophisticated tool that indicates which equities the largest investment firms like, and which hedge funds have historically outperformed the market. Thus, TipRanks assists investors in building a unique investment portfolio using market information from fund managers.

TipRanks tracks only the top hedge funds. It currently monitors the performance of 466 hedge fund managers. When reporting hedge fund performance to individual investors, TipRanks employs a range of performance metrics and data.

Investors can learn more about the top 100 managers in the Expert Center‘s page about hedge fund managers. Users can sort the list based on the amount of money being managed in the assets.

The list contains several useful features, including:

• Portfolio value – total assets under management 

The total market value of the securities that a hedge fund holds or manages on behalf of its customers is known as assets under management (AUM), often referred to as funds under management. Investors can use AUM to understand how big a firm is compared to its rivals.

• Portfolio gain– since June 2013
• Sharpe ratio – measures the portfolio return of the hedge fund in relation to its risk

Sharpe Ratio = (Return of Asset – Risk-Free Return) / Standard Deviation of Asset’s Rate of Return

The Sharpe Ratio is crucial for producing profits and identifying risk when considering hedge funds. Investors benefit from comparing all hedge funds’ risk and adjusted return rates. This ratio provides a clear view of the situation and may determine if the risk investors are taking will result in positive returns. Generally, a Sharpe ratio of 1 to 2 is seen as favorable. Any result greater than 3 is outstanding, and a ratio between 2 and 3 is extremely good.

• The Average Return 
• The Number of Followers

• A “Follow” Button

You are now familiar with the wide range of metrics used by financial institutions, such as assets under management, the Sharpe ratio, average returns, and portfolio gains.

Hedge Fund Activity Tracker

Each hedge fund’s complete portfolio and results can be viewed on their individual pages. In addition, you may view the manager’s profile by clicking on his or her name.

On this page, you see the portfolio value of the hedge fund. Additionally, you may view the manager’s average return for the previous 12 months, the past three years, and since the last filing.

Next, you can see that TipRanks calculates each hedge fund’s performance compared to other hedge funds and the S&P 500. The efficiency of a traditional hedge fund is frequently assessed by comparing the returns to a sector benchmark. This is a crucial tool for evaluating all different types of investment managers, since it acts as a point of comparison for tracking manager performance and a yardstick for comparing investment outcomes. 

Learn from Hedge Funds’ Portfolio Activity

The portfolio activity section on the hedge fund manager’s page helps investors by showing which stocks hedge funds are buying, selling and holding. Investors can use that information as a starting point for their investment research, by zeroing in on the stocks the hedge funds are interested in.

Additionally, the portfolio activity section can show investors how to diversify their holdings. Following the investment patterns of successful hedge fund manager is one way investors can learn how to diversify.

One of the most important factors in investment success is diversifying portfolios into different types of stocks, so that risk is mitigated. The saying, “Never put all your eggs in one basket,” usually applies to financial situations. If one sector performs poorly, investors with a diversified portfolio won’t suffer too badly because they have also placed their money in a better-performing sector.

Thus, creating a sector-balanced stock portfolio improves investors’ chances of success in the stock market. On TipRanks’ Hedge Fund pages, investors can see the stocks that hedge funds recently added to or withdrew from their portfolios, as well as the hedge fund’s history of transactions for each stock.

Last but not least, sector breakdown by the hedge funds show how the assets of the popular fund are allocated, on a quarterly basis, thereby assisting the investors in creating a sector-balanced portfolio. 

Finding the Best-Performing Hedge Funds

TipRanks ranks hedge fund managers according to their success rates and average returns, and the statistical significance of their trades. TipRanks’ algorithms continually calculate and update this data. Therefore, you can easily determine which hedge fund managers are outperforming the others at any given time.

TipRanks’ Top Hedge Fund Managers tool can be used to assess the hedge fund’s performance. You are now acquainted with the many parameters employed by industry participants, ranging from assets under management and the Sharpe ratio to the Average returns and Portfolio gains.

Furthermore, you have discovered the advantages of following hedge funds on the TipRanks platform, now that you know more about how sector diversity affects returns across strategies. Choosing stocks to further research, based on hedge funds’ Buy, Sell and Hold decisions, is also an excellent stock research strategy.

Keep all these benefits in mind and click the “Follow” button on the upper right side of a hedge fund page to get alerts and remain updated about all that hedge fund’s movements.

TipRanks’ Hedge Fund Tool

If your budget allows, invest more to gradually grow your portfolio and monitor it frequently, but try to keep your emotions in check. You will find the information you need to assess your portfolio in TipRanks’ Hedge Fund Managers tools. Follow your favorite hedge fund managers, and use the best hedge fund managers’ techniques to your advantage.

The Expert Center feature from TipRanks provides research capacity comparable to that of the largest institutions in the world, allows you to tap into the knowledge of 300 hedge funds and 8,000 analysts, covers 100K experts, and provides you with real-time notifications about the experts you follow. You are invited to try the Expert Center now.

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