Citadel's $16 Billion Profit Tops Paulson's Previous Best Trade

Ken Griffin's Citadel generated a record $16 billion in profit for clients last year, outperforming the rest of the industry and eclipsing one of history's most successful financial plays.
‍

According to estimates by LCH Investments, a fund of hedge funds, the top 20 hedge fund firms collectively generated $22.4 billion in profit after fees in 2020. This was led by Citadel, whose gain was the largest annual return for a hedge fund manager, surpassing the $15 billion that John Paulson generated in 2007 on his bet against subprime mortgages. This has been described as the "greatest trade ever" in a subsequent book of the same name by Gregory Zuckerman.
‍

Citadel's success last year was not due to one single trade. According to Bloomberg, the firm's flagship hedge fund gained 38% last year by trading a variety of assets, including equities, commodities, and fixed income. The firm's five core strategies (macro, quant, credit, etc.) all performed well, resulting in an $8.5 billion return for investors at the end of the year.
‍

Hedge funds lost a total of $208 billion last year, with many managers finding themselves on the wrong side of global market turmoil. LCH estimated that the top 20 managers saw a return of 3.4%, while the rest of the funds studied by LCH suffered losses of 8.2%.
‍

While many equity-focused funds saw their performance suffer as stock markets fell, plenty of macro funds benefited from bets on rising rates and volatile currencies. And major hedge funds that have dozens of trading teams across different assets showed the upside of such diversification.
‍

"Once again, the largest gains were made by large multistrategy hedge funds like Citadel, DE Shaw and Millennium," LCH Chairman Rick Sopher said in a statement. "These funds have generated strong returns in recent years, reflecting their dominance in strategies that don't rely on rising asset prices, and their substantial size."
LCH's annual ranking is one way to measure the performance of hedge funds. However, it is important to note that this ranking may exclude newer or smaller hedge funds that have outperformed on a percentage basis.
‍

To see more hedge fund returns by percentage, visit our website. We have a wide variety of data and resources that can help you make the most informed decisions possible.
‍

The findings also reflect the growing clout of multistrategy hedge fund firms. These firms are on the cusp of taking over equity-focused funds to become the dominant strategy in the industry. Their growing assets and higher fees are helping them win an expensive battle to hire and retain top traders.
‍

According to LCH, the financial industry has generated over $1.4 trillion in profits for clients since it began. The top 20 managers, who oversee nearly 19% of the industry's assets, have generated $692 billion of that total, or 49%.
‍

There are many benefits to be gained from using the internet. Perhaps the most obvious is the ability to connect with people from all over the world. With just a few clicks, you can communicate with anyone, anywhere. The internet also provides a wealth of information, making it a valuable resource for research and learning. And, of course, there's the entertainment factor. With so much to do online, it's no wonder the internet is such a popular pastime.
‍

Since its launch, the company has seen great success.