The top 25 hedge fund managers earned a total of $21.5 billion last year. The top manager earned $3.5 billion and the "straggler at the 20th position on the list earned only $360 million. Best of all, their earnings are only taxed at 15%. Their big paydays were a reward for producing outsized returns to their investors. In general, last year was not good year for hedge funds. Most of them were unable to beat the S&P 500 index fund which returned over 30% last year.