According to a report by Bloomberg, billionaire money manager Ken Griffin, the head of Citadel, has guided his multi-strategy funds to 8.8% returns for the first half of 2018. The firm's flagship Kensington and Wellington funds, which gained 13% in 2017, climbed by 1.5% for the month of June alone. This strong first-half performance positions Griffin ahead of his primary rivals and continues the firm's extended winning streak, even as the climate for hedge funds has been challenging at best in recent years.
Equity, Commodities, Fixed Income
According to a person with knowledge of the fund's performance who remained unidentified in Bloomberg's report, the strong first-half performance by the Kensington and Wellington funds was thanks to equity, commodities, and fixed-income strategies. At the same time, both quantitative investments and credit also made money over that period.
At $30 billion, Citadel is outperforming its primary rival, Millennium Management, the fund of Izzy Englander. Millennium has seen its flagship fund up nearly 6% for the first half of the year, with little change in the month of June. In either case, though, both funds are trouncing the general hedge fund sphere; overall, hedge funds have gained just 1.2% this year on an asset-weighted basis, as compared with 2.7% returns through June for the S&P 500 Index.
Multi-Strategy Funds Dominate
Multi-strategy funds more broadly have tended to outperform their peers in the hedge fund space early this year. The Double Black Diamond fund of Carlson Capital, for instance, gained 6.4% for the year through June. Empyrean Capital Partners, with about $3.5 billion in AUM, returned 4.8% in its hedge fund over the same period. Och-Ziff Capital Management Group LLC, the fund of prominent investor Dan Och, climbed by 4.4% over this period, while Highbridge Capital Management's multi-strategy fund brought in 2.4%, still outpacing the S&P for the period in question.
For Citadel, its Global Equities fund did not perform quite as well in June, gaining just 0.2%. However, that fund has seen first-half performance levels of 5.2% gains. The Global Fixed Income fund remained steady in June, providing 7.1% returns overall for the first half of the year. The Tactical Trading fund, based on equity and quant approaches, climbed by 1.7% last month, with total gains of 7.8% for the year.
The success of Citadel and other multi-strategy funds may have inspired a resurgence in hedge fund launches. Michael Gelband's ExodusPoint Capital Management, which started trading in June with about $8 billion in assets, gained 0.42% for its first month. This is a record, marking the most successful first month ever for a hedge fund startup.