The yearly ranking of the top 20 hedge fund managers in the world by LCH Investments puts Citadel, a Miami-based hedge fund run by Ken Griffin, as the highest-earning hedge fund ever. According to the rating, Citadel is expected to generate $16 billion in earnings for investors in 2022 and $65.9 billion in net gains overall since its founding in 1990. LCH predicts that Citadel will end 2022 with $62.3 billion in assets under management after posting a 38.1% return on its flagship multi-strategy Wellington fund. Despite Bridgewater, another hedge fund run by Ray Dalio, having a successful year, Citadel nevertheless outperformed it to claim the #1 spot on the all-time list.
LCH Investments, the oldest hedge fund in the world with an average return of 9.9% since its founding in 1969, has also started keeping track of which managers have produced the most raw cash for clients. After Ray Dalio’s Bridgewater took the top spot for seven years till Citadel replaced it this year, George Soros’ fund topped the debut ranking in 2010. After decades of impressive performance and a 26% return in 2021, Citadel’s flagship fund had an outstanding year. In 2022, returns on Citadel’s fixed income, tactical trading, and equity funds were all more than 21%. At the start of the year, the company paid investors $7 billion in profits. Citadel also makes billions more annually from its market-making operation, Citadel Securities, and according to Forbes, Griffin’s net worth has increased by a factor of two over the past two years, reaching $32 billion.
Citadel’s successful 2022 performance can be ascribed to its macro hedge fund strategy, which bases trading on global economic difficulties. In general, macro hedge funds that make trades based on these kinds of global economic challenges did well in 2022. The HFRI 500 Macro Index, which tracks these funds, increased 14.2% last year, and D.E. Millennium Management, owned by Israel Englander and Shaw, generated returns of 24.7% and 12.4%, respectively. According to LCH, D.E. Investors made $8.2 billion from Shaw, while $8 billion went to Millennium.
On the other hand, funds like Lone Pine and TCI that were net long on equity holdings fell farther down the list, and Chase Coleman’s Tiger Global, which was on the list from the previous year and had amassed $25 billion in net gains since creation, was eliminated. Daniel Loeb’s Third Point also dropped off the list as a result of a 21.8% fall in its primary fund.
It’s important to note that Citadel declined to comment on its investment philosophy, but Griffin told Forbes last year that high inflation would prompt central banks all over the world to aggressively tighten interest rates. Griffin also expressed concern about how sanctions against Russia would affect how the dollar is viewed globally.
Rick Sopher, Chairman of LCH Investments and CEO of Edmond de Rothschild Capital Holdings, praised Citadel’s performance in 2022 for surpassing John Paulson’s 2007 gain, which he called “the best deal ever.” Ken Griffin’s status as the new hedge fund king has been cemented by Citadel’s rapid rise up the rankings over the previous few years.
Additionally, it’s important to note that Citadel’s performance has been reliable across time, not only in 2022. A $1 million investment in Wellington at the time of its founding in 1990 would be worth $328 million today, as opposed to $23 million if it had been placed in the S&P 500 Index. The strong returns Citadel has produced for its investors over the years are highlighted by this.
Finally, Citadel’s $16 billion profit in 2022 solidified its status as the highest-earning hedge fund ever, outpacing the profits of other illustrious hedge funds like Bridgewater and John Paulson’s fund. During a year when equity markets plummeted, its macro hedge fund approach, which bases trading on global economic difficulties, allowed it to excel.