Ken Griffin’s Citadel has emerged as one of the biggest hedge fund winners from January’s financial market turmoil.
The firm, which manages $43bn in assets as one of the industry’s largest players, gained 4.7 per cent last month in its flagship fund, according to a person who had reviewed its performance data. Citadel’s global fixed income fund, meanwhile, gained 4.9 per cent.
The US S&P 500 share index fell 5.3 per cent during the month, having at one point been on track for its worst January on record. The fall came as investors dumped technology and other stocks that had been richly valued during the big rally from the pandemic-era lows hit in March 2020.
Hedge funds on average lost 1.5 per cent last month, according to data group HFR, their biggest monthly loss since the onset of the pandemic. Funds betting on equities fared worse, posting a fall of 2.1 per cent.
Citadel is one of a number of so-called multi-strategy funds that employ multiple teams of traders across a range of investing styles.
Such funds have been among the biggest winners during the pandemic, as their wide diversification across asset classes and their ability to increase their bets rapidly when markets are moving in their favour but slash positions when conditions sour has helped them navigate a series of major market upheavals.
Citadel, which made money across all its strategies last month, made 24.5 per cent in 2020, while last year it gained 26.3 per cent.
Rival Millennium International, meanwhile, gained around 1.7 per cent last month, according to people who had reviewed the fund’s performance data. It made 13 per cent last year and 25.6 per cent in 2020, its best performance in two decades.
Citadel and Millennium declined to comment.
Citadel’s profits last year equated to $8.2bn in dollar gains for investors, according to research by LCH Investments, leaving billionaire Griffin’s Citadel as the second best performing manager of all time, behind Ray Dalio’s Bridgewater.
The big gains posted by multi-strategy funds have fuelled a vicious talent war in the sector, pushing payouts for top traders sky-high. Payments just to compensate traders when they leave a rival can now reach $10mn and occasionally as much as $20mn.
Last month the Financial Times reported that Canadian investment giant Brookfield was expanding its multi-strategy hedge fund business into Europe, pitting it against the likes of Citadel and Millennium in the region.