According to one investor, Ken Griffin’s US hedge fund Citadel made $16 billion in profit after fees last year, the largest annual gain ever made by a hedge fund manager.
Citadel topped the top 20 hedge fund manager’s list in a report released on Monday by the fund of funds LCH Investments, surpassing John Paulson’s 2007 $15 billion gain, which has been described as “the greatest trade ever,” according to Rick Sopher, LCH chairman.
Citadel Annual Fund
Overall, the top 20 managers earned $22.4 billion net of fees for their investors in 2022 and $691.6 billion net of fees since inception. LCH estimates that the top 20 funds earned 3.4% last year, while the rest lost 8.2%.
Hedge fund managers lost $208 billion last year, bringing net gains since inception to $1.42 trillion, with the top 20 managers accounting for 48.7%.
LCH Investments, as a fund of funds, was able to estimate these industry titans’ gains from its own investing activity.
Despite Bridgewater’s estimated $6.2 billion in net gains in 2022, Citadel surpassed it to the top of the all-time list. Citadel’s flagship multi-strategy Wellington fund returned 38.1% last year, shining in a year when equity markets crashed, and LCH estimates the firm will finish 2022 with $62.3 billion in assets under management after posting the highest single-year profit by any hedge fund on record.
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LCH Investments
“It even outperforms [John] Paulson’s 2007 gain, which has been dubbed “the greatest trade ever,” says Rick Sopher, chairman of LCH Investments and CEO of Edmond de Rothschild Capital Holdings, in a press release. “Their rise up the rankings in recent years has been remarkable.”
LCH Investments is the world’s oldest hedge fund, having returned 9.9% per year since its inception in 1969.
Sopher began tracking which managers generated the rawest cash for investors because many hedge funds with standout returns enjoy their best years of performance with a smaller amount of assets before using that track record to attract more capital.
In 2010, George Soros’ fund was at the top of his list, and Dalio later took over for seven years before Griffin surpassed him this year.
Citadel’s flagship fund had a stellar year after a 26% return in 2021 and decades of strong performance—$1 million invested in Wellington in 1990 would be worth $328 million today, compared to $23 million if it were invested in the S& P 500 Index.
Citadel’s fixed income, tactical trading, and equities funds all outperformed by more than 21% in 2022.
According to the Wall Street Journal, the firm returned $7 billion in profits to investors at the start of the year, with some expected to come from all four funds. Citadel makes billions of dollars from its market-making business, Citadel Securities, and according to Forbes, Griffin’s net worth has more than doubled in the last two years to $32 billion.
Citadel declined to comment on its investment strategy, but Griffin told Forbes last year that high inflation would force central banks around the world to aggressively tighten interest rates, and he was concerned about how sanctions against Russia would affect how the dollar is perceived globally.
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