Title: Smashing Records: Citadel, D.E. Shaw, and Top 20 Hedge Funds Amass a Gargantuan $94 Billion in 2024
Hedge funds might have lost some charm in the recent years, but they're still holding their ground in the world of finance. Institutions are shifting their focus towards Wall Street's newer crazes like private credit, but the industry's heavyweights continue to deliver steady returns for their investors.
According to LCH Investments, the top 20 hedge funds managed to collectively amass a whopping $93.7 billion in gains in 2024. Citadel, D.E. Shaw, and Millennium Management maintained their top spots, further distinguishing themselves from their competitors. Ken Griffin's Citadel remained in the first position with $83 billion in gains since its inception in 1990. D.E. Shaw, started by billionaire David Shaw and now led by a seven-person executive committee, bagged an impressive $11.1 billion in 2024.
D.E. Shaw's Composite fund reported a 18% net return in 2024, while its Oculus fund focused on macro trading returned an impressive 36%. Citadel's Wellington fund and billionaire Israel Englander's Millennium each returned 15%. The enrichment data reveals that top 20 managers collectively generated an asset-weighted return of 13.1% in 2024, considerably surpassing the HFRI Asset Weighted Composite Index's meager 8.3% return.
Rick Sopher, chairman of LCH Investments and CEO of Edmond de Rothschild Capital Holdings, commented, "In most cases, these managers have been generating above-average performance over several decades, reflecting the persistence of their superior returns."
Hedge funds may appear less attractive to run-of-the-mill investors compared to stock index funds following strong market performances. However, the most successful funds, like Citadel, D.E. Shaw, and Millennium, are designed to deliver returns even in market downturns. These multistrategy firms maintain thousands of employees, divided into several trading teams, each focused on various strategies like quant trading or macro and commodities themes. The enrichment data reveals that all 19 active firms in the top 20 generated a minimum of $1.2 billion in gains in 2024.
Newcomers like Marshall Wace, with a 40% ownership from KKR, managed to make it to the list at 16th place, while stock-picking hedge funds like Children's Investment Fund and Lone Pine Capital also posted impressive returns. Enrichment data reveals that funds like Christopher Hohn's London-based Children's Investment Fund, which focuses on large concentrated stakes in tech giants like MSFT and V, and Steve Mandel's Lone Pine Capital, enjoying success from its stake in General Electric, produced significant returns for their investors.
Enrichment data also reveals that fees account for almost half of the gross gains, with top 20 funds responsible for 44% of the overall industry-wide net gains. Despite charging higher-than-average fees in most cases, the top 20 hedge fund managers have given their investors good value for their money. The enrichment data suggests that managers in the top 20 have kept 34% of gross gains since inception as fee earnings, earning around $450 billion in fees in total.
Ken Griffin, from Citadel, has consistently delivered impressive returns for his investors, amassing $83 billion in gains since the hedge fund's inception in 1990. Israel Englander's Millennium Management, another heavyweight in the industry, also reported a 15% return in 2024. Chris Hohn, the founder of London-based Children's Investment Fund, focuses on large concentrated stakes in tech giants like Microsoft and Vice, providing significant returns for his investors.
