Hedge fund returns smash records even as K-shaped economy endures
Andrea Riquier USA TODAY
Jan. 19, 2026, 2:10 p.m. ET
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Which British hedge fund made $19 billion in 2025?
A British hedge fund made $18.9 billion for its investors in 2025, marking the largest annual dollar gain ever recorded by such a fund, even as concerns about widening inequality plague the U.S. economy.
TCI Fund Management, which had $77 billion in its coffers as of last month, made a return of 27% last year, according to an annual survey conducted by finance firm Edmond de Rothschild Group. For context, the broad S&P 500 index returned 16.4%.
While many investors have loaded up on superstar stocks that benefit from the AI revolution, TCI made big bets on other industries. Its two biggest holdings, according to various media reports, are General Electric Co. and Safran SA – both aerospace companies.
Economists and other professionals who keep an eye on financial markets have become increasingly concerned about a widening gulf between Americans in the top wealth brackets and everyone else. The so-called K-shaped economy trend has been driven in large part by the massive gains in stocks and other assets in recent years.
As USA TODAY reported in November, one analyst reckons that nearly 90% of households earning over $100,000 own stocks, while only 28% of households earning less than $50,000 do.USA TODAY Shopping: Shop sales in tech, home, fashion, beauty & more curated by our editors.
That’s not just concerning for what it contributes to inequality. It also suggests that if the stock market were to falter, much of the spending that has been propping up the economy would pull back.
Meanwhile, many low- and moderate-income Americans are struggling to afford things like rent and groceries. “You have a conundrum of rich people holding the economy up, and inflation with it, while others struggle,” said Diane Swonk, chief economist for KPMG US, in a November interview.
A Jan. 19 analysis from Torsten Slok, Apollo chief economist, showed that households in the bottom 40% of earners are experiencing higher inflation than those in the top 20%. The prices of the things they spend the most on – rent, electricity, food, transportation “and other necessities” – are rising faster than discretionary items, he showed.
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For now, however, many analysts still expect another strong year in the stock market, at least. In December, strategists at Deutsche Bank said they expect the S&P 500 to be nearly 18% higher, while Morgan Stanley forecast a 14% increase.
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