Saturday, April 20, 2024

Citadel tops all-time ranking after record investor profit

Ken Griffin’s Citadel made $16bn for its investors in 2022, a record amount which takes it to the top of an all-time hedge fund ranking. 

The $62bn multi-strategy manager, which moved its headquarters from Chicago to Miami, has now made $65.9bn for investors since inception, according to research by LCH Investments, part of Edmond de Rothschild.

That figure takes it past Bridgewater Associates, the largest hedge fund manager in the world, which has generated $58.4bn since inception.

The top five is made up of two more multi-strategy managers, DE Shaw and Millennium, which have made $51.9bn and $50.4bn since inception, and Soros Fund Management, which no longer managers outside capital.

“In 2022 the largest gains were once again made by the large multi-strategy hedge funds like Citadel, DE Shaw and Millennium,” said Rick Sopher, who led the research. The trio collectively generated $32.0bn of net gains for investors.

“[They] were able to combine strong performances from several sources including macro, trading, quant and equity dispersion strategies. The strong gains they have generated in recent years reflect their increasing dominance in strategies which do not depend on rising asset prices, and their substantial size.”

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LCH’s long-running top 20 ranking of “Great Money Managers” showed how multi-strategy managers led performance in 2022 and equity managers generally lost out most.

Steve Mandel’s Lone Pine made a net loss of $10.9bn and Sir Christopher Hohn’s TCI an $8.1bn net loss, according to the list.

Chase Coleman’s Tiger Global dropped out of the top 20 after heavy losses across its public and private investments last year.

“Equity long/short managers, especially those who had been running net long and with a growth bias, generally performed poorly, with some performing even worse than market indices,” added Sopher.

“Many such managers failed to anticipate or adequately hedge against the impact of rising interest rates and were unable to generate sufficient profits to compensate on the short side.”

Sopher said multi-strategy firms had achieved their strong net returns “after passing on substantial operating costs, which up to now has been tolerated by investors.”

According to FT calculations, Citadel’s net gain came after expenses and performance fees of about $12bn.

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