Ken Griffin’s hedge fund Citadel posts double-digit returns in 2023, but lags the S&P 500 (2024)

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Ken Griffin’s hedge fund Citadel posts double-digit returns in 2023, but lags the S&P 500? ›

Billionaire investor Ken Griffin's various hedge fund strategies at Citadel all posted double-digit returns for 2023, but they failed to beat the S&P 500. Citadel's multistrategy Wellington fund gained 15.3% last year, according to a person familiar with the returns.

Since its launch in 1990, Citadel's flagship Wellington fund has returned 19.6% a year on average, compared with 10.7% for the S&P 500. The firm now manages about $60 billion, as does Millennium.

In a year that most hedge funds struggled to make money for their clients, Wellington delivered solid returns of 15.3%, crushing the hedge fund industry average of 4.4%. The Citadel Investment Group's fund generated a profit of $7 billion in 2023, all of which it plans to distribute to its clients this year.

Data shows that hedge funds consistently underperformed the S&P 500 every year since 2011. The average annual return for hedge funds was about 4.956%, while the S&P 500 averaged 14.4%.

The average annual gain for the S&P 500 fund was 8.5%, or about 125% compounded for the decade. That means $1 million invested in the index fund more than doubled to about $2.25 million. For the hedge funds—not so much. The best one averaged 6.5% a year, or about 88% compounded.

Kenneth Cordele Griffin (born October 15, 1968) is an American hedge fund manager, entrepreneur and investor. He is the founder, chief executive officer, co-chief investment officer, and 80% owner of Citadel LLC, a multinational hedge fund.

Citadel LLC is one of the largest hedge funds based in the U.S., with approximately $92.46 billion in total assets under management as of Sept. 30, 2023. Citadel has generated roughly $74 billion in total gains since its inception in 1990, making it the most successful hedge fund of all time.

Full-year earnings were about $2.76 billion in 2023, with the firm pulling in $725 million in the final three months of last year. Citadel Securities came into prominence in the era of meme stocks, and is responsible for about a third of all US retail stock trades.

What is the most successful hedge fund return? ›

Citadel, which ranked second in 2023, made $8.1 billion in profits after bringing in a record-breaking $16 billion in 2022. Its $74 billion in gains since inception rank it as the most successful hedge fund in history.

Citadel has now made $74 billion for investors since its inception in 1990, more than any other hedge fund firm.

The 2 and 20 is a hedge fund compensation structure consisting of a management fee and a performance fee. 2% represents a management fee which is applied to the total assets under management. A 20% performance fee is charged on the profits that the hedge fund generates, beyond a specified minimum threshold.

Most hedge and private equity funds target a net IRR of 15% for their investors (after fees). This provides their investors with a meaningful premium over historical average stock market returns of 8%.

Additionally, markets can be unpredictable at any time, but certain stocks, funds and strategies may be able to assist your portfolio to perform better during a recession. Hedge funds are a good choice if you desire higher risk with a chance of higher returns.

Citadel LLC is one of the largest hedge funds based in the U.S., with approximately $92.46 billion in total assets under management as of Sept. 30, 2023. Citadel has generated roughly $74 billion in total gains since its inception in 1990, making it the most successful hedge fund of all time.

Citadel Securities has an overall rating of 4.2 out of 5, based on over 190 reviews left anonymously by employees. 80% of employees would recommend working at Citadel Securities to a friend and 69% have a positive outlook for the business. This rating has decreased by 1% over the last 12 months.

The best performing Sector in the last 10 years is Information Technology, that granded a +19.94% annualized return. The worst is Energy, with a +4.01% annualized return in the last 10 years. The main S&P 500 Sectors can be easily replicated by ETFs.