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It’s Kenny G’s World | Financial Times

The final data isn’t out yet, but 2022 will almost certainly turn out to have been another bad year for the hedge fund industry as a whole, and a deeply awful year for a few big players.

But not for everyone!

(Reuters) – Kenneth Griffin’s Citadel posted record earnings in its hedge fund and electronic trading businesses for 2022 despite turmoil in global capital markets, a source familiar with the matter said on Thursday.

The hedge fund operation earned about $28 billion in revenue, while Citadel Securities, one of the world̵[ads1]7;s largest electronic trading firms, brought in $7.5 billion.

Record earnings from the hedge fund unit come in a year of stellar performance for Citadel’s funds. The flagship Wellington fund posted gains of 38.1 percent last year, while the bond fund was up 32.58 percent, for example, according to the source.

We’ve previously written about how multi-strategy hedge funds like Citadel are on the rise these days. Macro funds ruled in 2022, but many large “multi-strata” also enjoyed good to great years despite the breadth of the financial market’s vomit.

For example, FTAV has heard that DE Shaw’s flagship fund earned 24.7 percent last year (the Oculus macro fund apparently earned 20 percent), and that Brevan Howard gained 20.1 percent (Brevan’s Alpha Strategies Fund had its best year ever, and was up. a yield of 28.5 percent). Bloomberg at the end of last year determined Millennium’s return at 10 percent.

But Citadel stands out from the pack, given its 38 percent return on a huge amount of capital. In our estimation, this means that Citadel will now finally have leapfrogged Ray Dalio’s Bridgewater as the highest-grossing hedge fund of all time. Not bad for a former computer geek from Boca.

© South Florida Sun Sentinel

The annual ranking of net gains since inception, compiled by LCH Investments, won’t be out for a few weeks, but given the $28 billion in gains reported by Reuters and WSJ that would put Citadel at $78 billion (LCH won’t include CitSec’s profits). .

Meanwhile, Bridgewater was heading for a stellar year until it stumbled sharply in recent months. It has trimmed the 2022 return of the Pure Alpha fund from about 22 percent at the end of September to just 6 percent in early December, according to Bloomberg.

Bridgewater offers different variations of its strategy, and we don’t know how much of the company’s estimated $150 billion in assets under management is in Pure Alpha, the more leveraged Pure Alpha II, risk parity funds, etc. So it’s hard to estimate even roughly. nominal dollar gains for 2022, even when looking at last year’s returns.

But LCH estimated Bridgewater’s net gains since inception at $52.2 billion last year, and despite its much larger AUM, Griffin looks set to finally topple Dalio at the top of the table. For reference, here’s what it looked like this time last year:

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Our impression is that after not caring about this ranking for a long time, Griffin started actually care a lot about it. So we suspect he’ll be quite happy to climb to the top.

But be prepared for the fury that will inevitably hit certain parts of the internet when the headlines hit.

Further reading:

— Ken Griffin, financial prodigy turned industrial giant
— Multi-strategy hedge funds are the new, superior fund-of-funds
— How Ken Griffin rebuilt the Citadel’s ramparts
— What is the Ken Griffin/Mayo story?

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