Hedge funds led by Chris Horn’s TCI and Ken Griffin’s Citadel hit 2023 profits at bumper year cap: LCH study

Billionaire money managers Chris Horn and Ken Griffin led their hedge fund in a bid to make 2023 the best year for their clients.

Hedge fund fund LCH Investments estimates that the industry generated a total profit worth $218 billion before fees. Mr Horne’s TCI Fund Management topped his LCH rankings with his US$12.9 billion, followed by Citadel with his US$8.1 billion.

The annual study focuses on the money managers that have generated the greatest overall returns in absolute dollars since their inception, and as a result, the largest and oldest hedge funds typically tend to perform best. The top 20 companies, which control less than a fifth of the industry’s assets, generated US$67 billion in profits last year, about a third.

Measured using more traditional methods of evaluating returns, the top group returned 10.5% in 2023, outperforming hedge funds with an average return of 6.4%. According to the report, the top 20 companies generated 83% of the absolute returns of all hedge fund managers over the past three years.

“In most cases, this reflects our ability to limit downside under adverse conditions and generate returns under favorable conditions, such as towards the end of 2023,” LCH Chairman Rick Sofer said in a statement. .

“These managers have produced decades of above-average performance, reflecting a continuum of superior returns.”

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The report also shows the dominance of large multi-strategy hedge funds, which have devoured assets, talent and leverage in recent years, causing anxiety among regulators, investors and traders.

Citadel, Izzy Englander’s Millennium Management and DE Shaw & Co lead the rankings for the most money earned since launch.

In the past three years alone, the trio generated profits of US$71.2 billion, representing 38.3 percent of all hedge funds’ total profits. They controlled 4.6% of industry assets at the end of last year, according to LCH estimates.

“These types of companies typically operate at much higher leverage levels than the average hedge fund, which helps them perform better,” Sofer said.

“Their high net returns are achieved after passing on significant operating costs that investors continue to tolerate. The sustainability of the risks associated with these models and their acceptability to investors and regulators However, it will naturally be subject to scrutiny.”