Citadel’s Ken Griffin Says Multistrategy Hedge Fund Boom Is Over

by Nishant Kumar of Bloomberg News, 11/19/24

The era of explosive growth in multistrategy hedge funds is over, according to billionaire Ken Griffin, who runs one of the biggest such firms.

“That chapter has come and gone,” the Citadel founder said in an interview with Bloomberg News in Oxford, UK. “The AUM flows into multistrategy funds are basically a push today.”

These funds have gobbled up cash in recent years by delivering mostly steady gains even during periods of market volatility, driven by a broad variety of investing approaches in their trading teams. Their ability to charge higher fees, spend big to recruit the best traders and fuel their positions with borrowed money have made them the most influential force in the $4.5 trillion hedge fund industry.

ken griffin

Citadel’s capital has risen more than five times to $65 billion since 2008, while rival Millennium Management has expanded at the same clip to over $70 billion, and D.E. Shaw & Co. has amassed more than $60 billion. Many of the top players are no longer actively raising cash as a talent crunch and challenges moving in and out of leveraged bets curtail their ability to keep growing.

Assets managed by multistrategy hedge funds dropped slightly to $366 billion this year, the first decline since 2016, according to Goldman Sachs Group Inc. Such funds have grown from just $134 billion in 2017.

For Griffin, the growth trajectory was boosted by capital returns to investors, known as limited partners or LPs. “Let’s face it: that was driven by the fact that we in particular were returning billions of dollars of capital a year back to LPs. They were looking to put that money to work,” Griffin said.

Citadel has regularly given back profits to control its size, returning $25 billion to clients since 2017.

The 56-year-old hedge fund titan spoke to Bloomberg shortly after addressing an audience packed with students at the historic Oxford Union on Monday, where he discussed a range of topics from Donald Trump’s potential tariff policies to investing and immigration.