The Chicago hedge fund hailed the biggest hit in history after making a record profit of £13billion
A hedge fund has been hailed as the most successful in history after making a record £13billion profit for investors last year.
The boom from Citadel, a Chicago-based fund that manages £44bn in assets, surpassed the previous record of £12.6bn set in 2007 by fund manager John Paulson, whose bet against the subprime mortgages at the start of the global financial crisis was called “the greatest business of all time”.
But Citadel’s performance appears to have eclipsed Paulson’s record after 16 years, with its flagship hedge fund gaining 38% last year after making money in its five core areas, rather than a single trade.
Record returns: Citadel, a Chicago-based fund run by Ken Griffin (pictured), made a profit of £13billion for investors last year
The fund is managed by Ken Griffin, a hedge fund manager from Florida who founded Citadel in 1990 and whose net worth is estimated at over £26 billion.
Estimates from LCH Investments, led by private bank Edmond de Rothschild, found that the world’s 20 largest hedge funds generated £18.2bn in profit after fees in 2022.
But the picture was much bleaker for the rest of the sector, with LCH estimating that while the top 20 funds posted returns of 3.4%, the others suffered losses of 8.2%.
Overall, the industry lost £169 billion last year as global markets were hit by rising interest rates, inflation and the war in Ukraine.
But the performance showed the growing dominance of large multi-strategy hedge funds, which rather than investing primarily in stocks are spreading their portfolios across other assets such as government bonds and currency trading.
Having a larger and more diversified portfolio also allows these funds to attract higher fees.