Who is credited with creating the first hedge fund in 1949?

Alfred Winslow Jones is credited with creating the first modern hedge fund in 1949. Jones combined long positions in stocks he expected to rise with short positions in stocks he expected to fall, seeking returns based more on security selection than on the market’s overall direction.

He organized the strategy through a private partnership and used leverage to increase exposure. He also introduced a performance-based compensation approach, taking a share of profits. These features—long/short investing, a limited partnership structure, leverage, and incentive compensation—became central elements of the hedge-fund model.

Jones’s fund was not widely famous at first. Its methods drew broad attention after journalist Carol Loomis profiled him in Fortune in 1966, reporting strong performance relative to leading mutual funds. That article helped inspire a wave of new hedge-fund launches.

The common mix-up is Benjamin Graham, Warren Buffett, or George Soros. All influenced investment history, but none is generally credited with creating the first modern hedge-fund structure. Soros became famous for later macro investing, while Buffett and Graham are chiefly associated with value investing.