Hedge fund giants Citadel and Millennium post strong first-half gains

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Big-name hedge funds Citadel and Millennium have made solid gains in the first half of the year, extending a strong run for so-called multi-manager firms that are increasingly dominant in the industry.

The flagship Wellington fund of Ken Griffin’s Citadel was up 8.1 per cent at the end of June, while Izzy Englander’s hedge fund Millennium was up 6.9 per cent, according to people who have seen the numbers.

While those figures lag behind a 15 per cent gain for the S&P 500 stock index over the same period, they eclipse the 5.2 per cent gain made by hedge funds on average to the end of May, according to data provider Hedge Fund Research.

Multi-manager hedge funds typically employ tens or hundreds of teams of traders across a variety of asset classes and strategies, all controlled by a centralised risk system that is designed to prevent big losses.

Citadel and Millennium, which manage $63bn and $67.7bn in assets respectively, both aim to make money for investors even when broader asset markets are down. They profited, for instance, in 2022 when the S&P 500 fell 19.4 per cent.

The two groups declined to comment.

Investors have clamoured to invest in the multi-manager sector — which also includes the likes of Steve Cohen’s Point72, Balyasny and smaller rivals such as Eisler — in the hope of adding steady returns to their portfolios.

Unlike many hedge funds, multi-manager firms tend to pass on their costs, such as office rents, salaries and client entertainment, to investors, while also charging them a performance fee.

This has helped drive a war for talent in the sector, leading to enormous bonuses and other incentives for the top portfolio managers.

Rival Schonfeld Strategic Advisors had a particularly strong first half of the year, with its main Partners Fund gaining 10.3 per cent, although it was up just 3 per cent last year. The firm declined to comment.

Citadel and Millennium’s half-year performance, if it continues, would put them on course to beat their returns last year. In 2022 Citadel was up 38.1 per cent in its main fund, making it the most successful hedge fund of all time. Millennium was up 25.9 per cent in 2020.