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Ken Griffin’s hedge fund Citadel is up 29% this year. Here’s how they’re doing it

Billionaire investor Ken Griffin’s flagship hedge fund continued to shine amid the market’s extreme volatility, outperforming yet again in September and bringing its 2022 gains to nearly 30%, according to a person familiar with the returns. Citadel’s multi-strategy flagship fund Wellington rallied 2.5% last month, pushing its 2022 performance to 28.7%, the person said. All five core strategies in the fund — commodities, fixed income and macro, equities, quant and credit — were positive in September and year to date, the person said. The outstanding performance came as the wider market experienced the worst chaos it’s seen in years. The S & P 500 fell more than 9% in September to suffer its worst monthly performance since March 2020. The equity benchmark tumbled into a bear market as recession fears intensified on the back of the Federal Reserve’s aggressive rate hikes to tame surging inflation. Macro hedge funds, those making bets around political or economic events, have fared particularly well as a major policy shift from global central banks stoked wild moves in different asset classes including bonds, stocks, commodities and currencies. Besides the flagship fund, Citadel’s other three hedge funds also are having a stellar year. Its global fixed income fund returned 1.25% in September, bringing performance to 24% year to date, the person said. Citadel’s tactical trading fund gained 2.35% last month and 21.2% this year, driven by both fundamental long/short and quantitative equity strategies, the person said. Citadel’s equity hedge fund returned 2.51% in September, bringing its 2022 performance to 16.63%, the person said. The fund has outperformed the S & P 500 by 40 percentage points year to date through September. Griffin said at CNBC’s Delivering Alpha conference last week that he believes the Fed has more work to do to bring down inflation even after a series of big rate hikes. He also said there could be a chance for a recession next year. Bloomberg News reported on Citadel’s performance first. Hedge funds like Citadel use short bets against stocks to win as the stock market declines. It’s tough and risky for the regular investor to attempt to mimic that strategy. However, there are some funds that the regular trader can buy that use strategies similar to hedge funds that are in the green this year like Citadel. For example, the First Trust Managed Future Strategy fund , up more than 11% this year, is one and you can read about it here , and the Core Alternative ETF , which uses options to buffer returns like a hedge fund, also is in the green in 2022.

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