While the rest of the industry struggled last year, hedge fund Citadel managed to produce $16 billion in profit for its clients in 2022.
Key Details
- Citadel’s success last year marks one of the most successful financial maneuvers in history as the hedge-fund management company outperformed the rest of the industry.
- The top 20 hedge fund firms combined garnered $22.4 billion for their clients—Citadel alone managed to bring in $16 billion, passing previous records.
- However, success stories from last year were few, as the overall hedge fund industry lost more than $208 billion last year.
Why it’s news
Ray Dalio’s Bridgewater had held Leverage Capital Holdings (LCH) top hedge fund manager list for nearly seven years, but Citadel’s record-breaking profits soundly put Bridgewater in fourth place.
The number also passed the $15.6 billion investor John Paulson made in 2007. Paulson’s gains have previously been termed “the greatest trade ever.”
“The largest gains were once again made by the large multi-strategy hedge funds like Citadel, DE Shaw, and Millennium,” LCH Chairman Rick Sopher said in a statement. “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.”
Despite Citadel’s enormous success, the industry as a whole suffered last year. Hedge funds lost $208 billion last year. Of the top 20 managers, LCH estimated a 3.4% return.
LCH’s findings of the most successful firms also show a shift in trends at multi-strategy hedge fund firms become more successful than equity-focus funds. Multi-strategy hedge funds are able to retain traders through a growing asset base and higher fees.
Surprising statistics
Here are the returns for the top five firms according to LCH. . .
- Citadel $16 billion
- DE Shaw $8.2 billion
- Millennium $8 billion
- Bridgewater $6.2 billion
- Elliot $2.8 billion
