The top 20 managers, led by Ken Griffin’s Citadel, Bridgewater Associates and DE Shaw Group, made less than half of the $65.4 billion the group reported in 2021, when rising stock prices drove performance record. By comparison, they earned $63.5 billion in 2020 and $59.3 billion in 2019.
In 2022, when fears of rising interest rates and geopolitical uncertainty weighed on the markets, investment firms that focused on trading strategies and bet on macroeconomic trends reaped gains. Those whose strategies were tied to market movements 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 declines in the stock and bond markets.
Last year will mostly be remembered as a tough year, with the overall S&P 500 index down 20% and top hedge fund managers like Tiger Global and Third Point suffering losses. Overall, hedge funds lost $208 billion in 2022 to clients, marking the biggest single-year drop since 2008, when they lost $565 billion, according to LCH data.
Hedge funds, which jointly manage $3.3 trillion as of December 31, 2022, according to eVestment data, often promise to outperform, especially when markets stumble.
There was a shake-up among the top performers, as Griffin’s Citadel, which earned $16 billion, took the top spot ahead of Bridgewater, which earned $6.2 billion.
DE Shaw, Millennium Management, Soros Fund Management, Elliott Management and Viking Global Investors also made the top 10.
Caxton Associates and Moore Capital, companies that benefited from macro trading in 2022, made their return to the list, according to LCH, while Tiger Global, whose founder Chase Coleman got his start at Julian Robertson’s Tiger Management , and Third Point have dropped in 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 figures.
