Chicago hedge fund Citadel hailed smashes record £13bn gain

A hedge fund has been hailed as the most successful in history after bringing in a record £13bn investor profit last year.

The boom at Citadel, a Chicago-based fund that manages £44 billion in assets, surpassed the previous record of £12.6 billion set in 2007 by fund manager John Paulson, whose bet against subprime mortgages at the start of the global financial crisis had been labeled as the ‘biggest trade ever’.

But Citadel’s performance appeared to have surpassed Paulson’s record after 16 years, with his flagship hedge fund gaining 38 percent last year after making money in all five of its core areas, rather than from a single trade.

The fund is managed by Ken Griffin, a Florida hedge fund manager who founded Citadel in 1990 and is estimated to have a net worth of more than £26 billion.

Estimates from LCH Investments, led by private bank Edmond de Rothschild, found the world’s top 20 hedge funds to generate £18.2 billion in profits after fees by 2022.

But the picture was much darker for the rest of the industry, with LCH estimating that while the top 20 funds returned 3.4 percent, the rest lost 8.2 percent.

In total, 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 did not invest primarily in equities, but diversified their portfolios across other assets, such as government bonds and currency trading.

Having a larger and more diverse portfolio also allows these funds to attract higher fees.