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.
|BlackRock, Inc. (BLK )
|Blackstone Group L.P. (BX )
|Invesco Ltd. (IVZ )
|Lazard Ltd. (LAZ )
|KKR & Co. L.P. (KKR )
|Icahn Enterprises L.P. (IEP )
|Man Group Plc (EMG.L)
|Apollo Global Management (APO )
|Fiera Capital (FSZ.TO
|AGF Management Ltd. (AGF-B.TO)
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. As of July 1, 2019 Blackstone converted from a publicly traded partnership to a corporation.
The firm started paying a quarterly dividend in 2007 , however dividends have not been consistent.
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.
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 and has been increasing its dividends since 2006. The firm has been issuing special dividends every year since 2012.
KKR & Co. L.P. (KKR)
KKR (KKR 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 $113 billion in funds under management, as of September 30, 2019. The company’s focus is on generating alpha through five of its key funds (i.e. Man AHL, Man Numeric, Man GLG, Man FRM and Man GPM) that focus on different liquid and private markets around the world.
Apollo Global Management LLC (APO)
Apollo (APO) is a private equity and investment firm based in New York, New York. It was founded in 1990 and became publicly traded in 2011. It primarily manages assets and investments on behalf of pension and endowment funds, as well as other institutional and high net worth individual investors.
APO pays a quarterly dividend and has paid out numerous special dividends since 2011. Its dividend has not, however, been consistent.
Fiera Capital (FSZ.TO)
Fiera Capital is the third largest asset manager in Canada in terms of AUM. As of June 30, 2019 the firm managed nearly C$ 150 billion in assets and currently offers customised multi-asset solutions across conventional and alternative asset classes to retail and institutional clients in North America, Europe and Asia.
The firm has been paying dividends since 2010 and has offered 14 quarterly dividend increases since going public in 2010.
AGF Management Ltd. (AGF-B.TO)
Founded in 1957, the Canada based independent and globally diverse asset management firm had nearly C$ 39 billion in assets as of January 31, 2020. The firm offers a broad array of investment options including actively managed strategies, quantitative and factor based strategies, privately managed solutions and alternative strategies.
The firm has been paying regular dividends since 2016.
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.