Top hedge funds earned sharply less for clients in 2022, LCH data shows

0
95
FILE PHOTO: Citadel CEO Griffin speaks at 2022 Milken Institute Global Conference

By Svea Herbst-Bayliss

(Reuters) -The 20 best performing hedge fund managers earned $22.4 billion for investors in 2022, marking their slimmest gains since 2016 as many firms, including Tiger Global Management, struggled with slumping financial markets, LCH Investments data show.

The top 20 managers, led by Ken Griffin’s Citadel, Bridgewater Associates and D.E. Shaw Group, made less than half of the $65.4 billion the group returned in 2021 when rising stock prices led to a record return. In comparison, they made $63.5 billion in 2020 and $59.3 billion in 2019.

Citadel’s gain of $16 billion last year was the largest annual gain ever made by a hedge fund manager, LCH said.

In 2022, when fears of rising interest rates and geopolitical uncertainty weighed on markets, investment firms that focused on trading strategies and bet on macroeconomic trends reaped gains. Those with strategies linked to market moves stumbled.

Rick Sopher, chairman of LCH, a fund of funds firm that tracks returns and is part of the Edmond de Rothschild Group, said 2022 was a year of “great divergence” in which several of the top 20 managers managed to make gains for their investors despite the significant falls in equity and bond markets.

Last year will mostly be remembered as a tough one, with the broader S&P 500 index losing 20% and blue chip hedge fund managers like Tiger Global and Third Point nursing losses. Overall, hedge funds lost $208 billion in 2022 for clients, marking the biggest single-year decline since 2008, when they lost $565 billion, LCH data showed.

Hedge funds, which were jointly managing $3.3 trillion on Dec. 31, 2022, according to eVestment data, often promise to outperform, especially when markets are stumbling.

There was a shakeup among the very best performers as Griffin’s Citadel moved into the top spot ahead of Bridgewater, which earned $6.2 billion.

D.E. Shaw, Millennium Management, Soros Fund Management, Elliott Management, and Viking Global Investors also ranked in the top 10.

Caxton Associates and Moore Capital, firms helped by macro trading in 2022, made it back onto the list, LCH said, while Tiger Global, whose founder Chase Coleman got his start at Julian Robertson’s Tiger Management, and Third Point dropped off the list.

Citadel, which was founded by Griffin in 1990, saw its flagship Wellington portfolio gain 38% last year while its fixed income fund was up 33%, according to a person familiar with the numbers.

(Reporting by Svea Herbst-Bayliss; editing by Paul Simao)

tagreuters.com2023binary_LYNXMPEJ0M002-VIEWIMAGE