[Updated on July 10, 2018 by Shauvik Haldar]
Investing in publicly traded hedge funds is a great way for an investor to see returns through capital appreciation and dividend payments in the financial sector.
These securities can offer investors a lucrative opportunity to tap into upside potential while still enjoying a stream of dividends. For those willing to dip their feet into the world of hedge funds, several firms present themselves as attractive investment vehicles for income-hungry investors in search of potentially substantial returns. It must be noted that while these hedge fund companies do have the potential to bring high returns on investment, they can be very volatile with a lot of risk involved.
See also the 5 Common Misconceptions About Dividend Investing.
Below we highlight 10 of the biggest publicly traded hedge funds that pay out a dividend.
|Hedge Fund||Dividend Growth|
|BlackRock, Inc. (BLK )||8 years|
|Blackstone Group L.P. (BX )||5 years|
|Invesco Ltd. (IVZ )||9 years|
|Oaktree Capital Group LLC (OAK )||2 years|
|Och-Ziff Capital Management (OZM )||n/a|
|Lazard Ltd. (LAZ )||4 years|
|KKR & Co. L.P. (KKR )||1 year|
|Icahn Enterprises L.P. (IEP )||n/a|
|Man Group Plc (EMG.L)||1 year|
|Apollo Global Management (APO )||1 year|
BlackRock, Inc. (BLK)
BlackRock (BLK ) is one of the biggest and most well known independent investment management firms. Based out of New York, BlackRock provides a range of investment and risk management services. The firm invests all over the world and its clients are everyone from pension funds to corporations & insurance companies to endowments & sovereign wealth funds. In addition to operating a host of mutual funds and exchange-traded products, BlackRock is perhaps best known for their keen portfolio management skills. The company runs multi-asset portfolios covering stocks and bonds among other asset classes.
BlackRock has consistently paid a dividend since mid-2003 and has raised its quarterly dividend payment every year, except for 2009.
The Blackstone Group LP (BX)
Blackstone (BX ) is a manager of private capital and provides financial advisory services to its clients. Based out of New York, York, it was founded in 1985. BLK’s alternative asset management businesses include the management of private equity funds, real estate funds, funds of hedge funds, credit-oriented funds, collateralized loan obligation (CLO) vehicles and separately managed accounts.
The firm started paying a quarterly dividend in 2007 and has increased dividends since 2013.
Be sure to also check out the Dividend Investor’s Guide to Measuring Risk.
Invesco Ltd (IVZ)
Invesco (IVZ ) is an investment management firm based out of Atlanta, Georgia. IVZ provides a range of investment strategies and vehicles to its retail, institutional and high-net-worth clients around the world.
The company has paid a dividend since 1996. Starting in 2008, it switched to a quarterly dividend schedule after several years of paying a semi-annual dividend. It has gradually increased its dividend since a steep drop in 2008.
Oak Tree Capital Group LLC (OAK)
Oaktree (OAK ) is a global investment management firm focused on alternative markets.The firm manages funds in investment strategies that fall into six asset classes: distressed debt, corporate debt, control investing, convertible securities, real estate and listed equities.
Based in Los Angeles, California and founded in 1995, OAK became publicly listed on the NYSE on April 12, 2012. Though it has a relatively short history, OAK has increased its dividend for the last two years. This was a positive step as the company cut its dividend by a third each year during 2014 and 2015.
Och-Ziff Capital Management Group LLC (OZM)
Och-Ziff (OZM ) operates multiple investment strategies, including merger arbitrage, convertible arbitrage, equity restructuring, credit and distressed investments, private investments, and real estate. The firm is based in New York, New York and was founded in 1994. The company serves the investment needs of a diversified institutional base. It provides asset management services through its funds, which pursue a range of global investment opportunities seeking returns in low volatile market cycles.
The company became public in 2007, right before the financial crisis occurred. It started paying a quarterly dividend in 2008. However, for the last couple of years the company had been cutting its dividends.
Lazard Ltd. (LAZ)
Lazard (LAZ ) is a financial advisory and asset management company that is incorporated in Bermuda but operates out of New York, New York. It was founded in 1848. LAZ’s asset management segment includes strategies for the management of equity and fixed income securities and alternative investment and private equity funds, as well as wealth management.
Lazard has paid a quarterly dividend since 2005. The company has been increasing its dividends since 2008 except for 2013 when the dividends were cut.
KKR & Co. L.P. (KKR)
KKR (KKR ) is a private equity firm that specializes in leveraged buyouts and investments. Based in New York, New York, it was founded 1976 and became publicly traded in 2010. The firm manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, capital markets, credit strategies, and hedge funds.
KKR has paid a quarterly dividend since 2010, though the amounts have been quite irregular.
Icahn Enterprises L.P. (IEP)
Icahn Enterprises L.P. (IEP ) is a diversified holding company with interests in investment, automotive, energy, gaming, railcar, mining, food packaging, metals, real estate and home-fashion. Incorporated in 1987, IEP manages various private investment funds such as Icahn Partners L.P.
Man Group (EMG.L)
Man Group (EMG.L) is the world’s largest independent active investment management firm with nearly $113 billion in funds under management, as of March 31, 2018. The company’s focus is on generating alpha through five of its key funds (i.e. Man AHL, Man Numeric, Man GLG, Man FRM and Man GPM) that focus on different liquid and private markets around the world.
Apollo Global Management LLC (APO)
Apollo (APO ) is a private equity and investment firm based in New York, New York. It was founded in 1990 and became publicly traded in 2011. It primarily manages assets and investments on behalf of pension and endowment funds, as well as other institutional and high net worth individual investors.
APO pays a quarterly dividend and has paid out numerous special dividends since 2011. Its dividend has not, however, been consistent.
The Bottom Line
The hedge funds above have the potential to show investors lucrative returns through their extensive asset management portfolios and the stock growth potential that can come from them. But an intriguing aspect of these hedge funds is the potential returns in dividend income. However, investors need to be aware of the instability of regular dividend payments from some of the hedge funds. So while investing in these hedge funds can bring about substantial returns, there is volatility and risk that might not be appealing to all investors.