Investor says Ken Griffin’s Citadel made $16 billion last year – biggest annual hedge fund gain on record
One investor has estimated that US hedge fund, Ken Griffin’s Citadel, made $16 billion in profits after fees last year – the largest annual return a fund manager hedge ever earned.
In a report released Monday by hedge fund LCH Investments, Citadel topped a list of the top 20 hedge fund managers that beat John Paulson’s $15 billion gain in 2007, which is still to date. described as “the biggest transaction ever,” said Rick Sopher, president of LCH. .
Overall, the top 20 managers earned $22.4 billion in net fees for their investors in 2022 and have earned $691.6 billion in net fees for their investors since. found. LCH estimated a 3.4% return for the top 20 funds last year, while the rest lost 8.2%.
Overall, hedge fund managers lost $208 billion last year, bringing their net gain since inception to $1.42 trillion, of which 48.7% was attributed to the top 20 managers. earn.
As a fund of funds, LCH Investments is able to estimate the returns these industry giants derive from their own investments.
“We were invested with many or most of the top 20 managers, and that allowed us to get close to them, gathering information that would normally not be made public,” Sopher said.
He explains Citadel’s record gain is due to being a “diversified company with multiple sources of profit and aggressive capital allocation and risk management.”
“Their progress in the rankings over the past few years has been remarkable,” he added, noting that Citadel ranks #2 on the 2021 top 20 list.
Top 5 hedge fund managers
| hedge fund | Fund management | Net profit in 2022 (billion USD) | Net profit since inception (a) |
|
Citadel |
Ken Griffin |
16 |
65.9 |
|
Bridgewater |
Ray Dalio / Prince Bob, Greg Jensen |
6.2 |
58.4 |
|
DE Shaw |
Diversity |
8.2 |
51.9 |
|
Millennium |
British Israel |
8 |
50.4 |
|
Soros Fund Manager* |
George Soros / Various |
do not have |
43.9 |
| Source: LCH Investment | * denotes frozen profits when all external capital comes back |
“In 2022, the big multi-strategy hedge funds are once again reaping the biggest returns like Citadel, DE Shaw and Millennium,” Sopher said. “These managers together generated $32.0 billion in net profit and were able to combine strong operations from a number of sources including macro, trading, quantitative and distributed strategies. equity.”
Sopher said the dispersion between managers running diversified strategies and macro funds as well as equity buy/sell strategies has caused some funds to perform well in the last year and others to struggle. towel.
“A lot of [equity long/short] managers did not anticipate or adequately hedge against the impact of rate hikes and were unable to generate enough returns to cover short selling,” he said.
“If there is a lot of divergence and the stock market falls back, maybe we will see the same thing again,” he said.
Sopher says some managers can catch major events quickly.
“What I feel from our managers is that the probability of a big shock this year or the coming years is quite high given the state of public finances, the leverage in the system.”
