Citadel: Hedge fund rakes in £13bn profits as it posts the highest annual gain in history

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Monday 23 January 2023 12:33 pm

Ken Griffin’s Citadel raked in $16bn in profits for clients

Hedge fund Citadel made $16bn (£12.9bn) in profits for its clients last year as it bucked a wider slump across the market to post the highest annual gain in history, new data has revealed.

The profits for Miami-based Citadel, which manages $54bn (£43bn) in assets, charged its clients around $12bn (£9.7bn) in expenses and performance across the year, LCH Investments, a fund of hedge funds found.

The bumper year saw Ken Griffin’s hedge fund sail past the record set by John Paulson in 2007 when he made $15.6bn on a bet against the US subprime mortgage market.

“It even surpasses Paulson’s 2007 gain, which has been described as ‘the greatest trade ever,’” says Rick Sopher, chairman of LCH Investments and CEO of Edmond de Rothschild Capital Holdings, as reported by Fortune. “Their progress up the rankings in the past few years has been remarkable.”

Citadel, founded by Griffin in 1990, has now surpassed Ray Dalio’s Bridgewater as the most successful hedge fund of all time, the data showed.

The returns came after a volatile year on the markets which allowed managers deploying trading strategies and betting on macroeconomic trends to reaped bumper returns.

Citadel stole the top spot from Bridgewater which earned $6.2bn across the year. D.E. Shaw, Millennium Management, Soros Fund Management, Elliott Management, and Viking Global Investors also ranked in the top 10.

The bumper returns came amid a wider downturn in the market however, with the top 20 hedge fund cumulatively suffering a fall in profits.

The 20 best performing hedge fund managers earned $22.4bn for investors in 2022, their slimmest gains since 2016.

A host of big name investors which have raked in cash in the year up to 2022 suffered sharp falls, with investors like Tiger Global Management and Pershing Square hammered by the downturn in the market. 

Overall, hedge funds lost $208bn in 2022 for clients, marking the biggest single-year decline since 2008, when they lost $565bn, LCH data showed.