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By Anna Cooban, CNN
2 minute read
Updated 1:50 PM EST, Mon January 23, 2023
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London CNN —
Citadel is now the most successful hedge fund ever after it made $16 billion last year — the biggest annual windfall on record.
The Miami-based fund, founded and run by Ken Griffin, topped the 2022 ranking of the world’s best-performing hedge funds based on estimates from LCH Investments NV. Its huge gains came as many other investors suffered from steep drops in equity and bond markets.
Citadel’s record-breaking performance last year took total gains for the fund since its inception to nearly $66 billion. That knocked Ray Dalio’s Bridgewater — with gains of $58.4 billion — off the top spot for the first time in seven years.
Dalio’s fund made $6.2 billion last year, bringing total assets under management to $81 billion. Citadel manages $62 billion in assets.
“[Citadel’s $16 billion profit] even surpasses [John] Paulson’s 2007 gain, which has been described as ‘the greatest trade ever,’” Rick Sopher, chairman of LCH Investments, said in a press release on Monday.
Paulson, an investor, made $15 billion in 2007 after he bet that the value of securities backed by subprime mortgages would collapse, an event that helped trigger the global financial crisis.
“[Citadel’s] progress up the rankings in the past few years has been remarkable,” Sopher added.
Sopher said that Citadel, which started in 1990, does not rely on an investment strategy tied to rising asset prices, and has “multiple sources of profits,” two factors which may explain its record gain despite a volatile ride for markets last year.
Overall, the top 20 hedge funds made $22.4 billion in net gains in 2022, down almost 66% from the year before when markets were soaring, according to LHC Investment data. The S&P 500 index, by comparison, lost about 19% last year.
Citadel told CNN that it would not comment on a story related to its performance.
LCH was launched in 1969 and is the world’s oldest fund of hedge funds.
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Certainly! Let's break down the concepts mentioned in the article and the financial market terms you've included:
Financial Market Concepts:
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Markets: This term generally refers to the platforms or systems where buying and selling of goods, services, or financial assets occur. It can encompass various markets, including stock markets, commodity markets, foreign exchange markets, etc.
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DOW: The Dow Jones Industrial Average (DJIA or simply "Dow") is a stock market index that tracks the performance of 30 large publicly owned companies trading on the New York Stock Exchange (NYSE) and the NASDAQ.
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S&P 500: The Standard & Poor's 500 Index (S&P 500) measures the stock performance of 500 large companies listed on stock exchanges in the United States. It's a commonly used benchmark for the overall performance of the US stock market.
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NASDAQ: The NASDAQ Composite Index tracks the performance of more than 2,500 stocks listed on the NASDAQ exchange, primarily technology and internet-related companies.
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Fear & Greed Index: This index measures the sentiment of investors in the stock market, indicating whether investors are fearful (indicating potential buying opportunities) or greedy (indicating potential overbought conditions).
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Hedge Fund Performance: The article discusses Citadel, highlighting its exceptional performance and record-breaking profits, which made it one of the most successful hedge funds. A hedge fund is an investment fund that pools capital from accredited individuals or institutional investors and employs various strategies to maximize returns.
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Hedge Fund Strategies: Citadel's success is attributed to its diverse profit sources and investment strategies not solely reliant on rising asset prices. This highlights the importance of multiple revenue streams and adaptive strategies in volatile markets.
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LCH Investments NV: LCH Investments NV is a firm providing estimates and data related to hedge fund performance, ranking, and analysis. It's mentioned as a source of information in the article.
Recent Market News:
The article mentions various snippets of market-related news, such as:
- FTX founder's involvement in lending customer funds to a hedge fund.
- Analyst predictions about the rise of tech stocks in 2023.
- Speculations on mortgage rates and home prices for the year.
- Insights from CEOs about fitness memberships, travel costs, and consumer behaviors.
- Federal Reserve's interest rate hikes and comments by Fed's Powell.
- Concerns and predictions about a looming recession.
- Insights from various industry leaders about market strategies and trends.
- The Powerball jackpot and legal actions against financial institutions like Navy Federal and Google.
Understanding these concepts can help navigate discussions related to financial markets, investment strategies, and recent market developments. It's crucial to keep abreast of such news and trends for informed decision-making in investments and financial planning.
