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.
When it comes to investing, many think of the process as a
choice between growth and value stocks; you're either taking on
risk in search of capital appreciation, or you're seeking out
stable sources of current income through dividend payments.
Luckily, Wall Street has many investment options and investors
don't have to make a clear-cut choice between capital gains and
With the recent financial crisis still very fresh in investors'
minds, it's no surprise that many have been hesitant to return to
this corner of market. However, one particular corner of the
financials sector bears a appealing risk/return profile that
warrants a closer look in the current environment. They are
publicly traded hedge funds and they offer a lucrative opportunity
to tap into upside potential while still enjoying a stream of
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.
Below we highlight 10 of the biggest publicly traded hedge funds,
in terms of market capitalization, that pay out a dividend.
Investors should note that each of the funds profiled below also
maintains operations in other corners of the finance industry;
however, their asset management divisions could rake in big profits
that are not necessarily dependent on the performance of the stock
1. BlackRock, Inc. (
) is one of the biggest and most well known independent investment
management firms. Based out of New York, 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 currently has $3.67 trillion in
assets under management with a market capitalization of $32.75
BlackRock has consistently paid a dividend since mid-2003 and
has raised its quarterly dividend payment every year, except for
2009. Its current dividend yield of 3.21% warrants a closer look
from value investors looking to diversify into the financials
BlackRock shares have appreciated +6.00%, or $10.69,
2. The Blackstone Group LP (
) 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. It has a market capitalization of $18.89 billion
with $166.2 billion assets under management. 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
currently has a dividend yield of 3.39%.
Blackstone shares have appreciated +9.71%, or $1.36,
3. Invesco Ltd (
) is an investment management firm based out of Atlanta, Georgia.
It has $632.1 billion assets under management and a market
capitalization of $10.73 billion. 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 and has a current
dividend yield of 2.02%. 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.
Invesco shares have appreciated +20.21%, or $4.06,
4. Oak Tree Capital Group LLC (
) is a global investment management firm focused on alternative
markets. It has a market capitalization of $7.76 billion and
manages $77.9 billion in assets. 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. It has a short
history of dividend payments as it only has paid its quarterly
dividend twice so far. However, its dividend yield is an
Oaktree shares have appreciated +0.57%, or 24 cents,
5. Och-Ziff Capital Management Group LLC (
) 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. It
manages $31 billion in assets and has a market capitalization of
$4.15 billion. 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
The company became public in 2007, right before the financial
crisis occurred. It started paying a quarterly dividend in 2008.
OZM has a dividend yield of 5.65%.
Och-Ziff shares have appreciated +18.91%, or $1.59,
6. Lazard Ltd. (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 $160.4 billion in assets under
management and a market capitalization of $3.60 billion.
Lazard has paid a quarterly dividend since 2005 and it has a
good history of consistent dividend increases. It currently offers
a dividend yield of 2.22%.
Lazard shares have appreciated +12.72%, or $3.32,
7. KKR & Co. L.P. (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 has $40.37 billion in
assets under management and a market capitalization of $3.58
It pays a quarterly dividend, with irregular payment amounts.
Its dividend yield is 6.51% but due to inconsistent payouts, that
yield is not reliable.
KKR shares have appreciated +17.93%, or $2.30, year-to-date.
8. Fortress Investment Group LLC (FIG)
) is a global investment firm based in New York, New York. It was
founded in 1998 and went public in 2007. It offers alternative
investment products including private equity funds, liquid hedge
funds and credit funds. In addition, it offers traditional
investment products. Its assets under management are approximately
$47.8 billion. It has a market capitalization of $2.22 billion.
When it first became publicly traded it paid a quarterly
dividend, but stopped paying the dividend after the financial
crisis in 2008. However, it started paying a quarterly dividend
again in 2012 and currently offers a 4.69% dividend yield.
Fortress shares have appreciated +27.51%, or 93 cents,
9. Apollo Global Management LLC (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. It currently has $75.2 billion assets under
management and a market capitalization of $1.96 billion.
APO pays a semi annual dividend with some history of special
dividends. It has a current dividend yield of 1.98%.
Apollo shares have appreciated +22.4%, or $2.78, year to
10. Janus Capital Group Inc (JNS)
) is an investment firm based out of Denver, Colorado. It manages
$158.2 billion in assets for institutions and individual investors.
It manages investments in mutual funds and other pooled investment
vehicles and products for domestic and international clients. The
firm was founded in 1969 and Its market capitalization is $1.57
billion with $158.2 billion assets under management.
It used to pay an annual dividend, until 2011 when it started
paying a quarterly dividend. Its dividend yield currently sits at
Janus shares have appreciated +34.55%, or $2.18,
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.
Be sure to visit our complete recommended list of the
Best Dividend Stocks
, as well as a detailed explanation of
our ratings system here
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