In a year where many hedge funds posted unimpressive returns, Citadel, the Chicago money-management giant known for its swift movement and out-of-stock positions, generated more than 23 percent returns in its equity hedge fund and almost 18 percent in its multi-strategy flagship funds, Kensington and Wellington, according to someone who reviewed the numbers.
Citadel Tactical Trading, a third fund that historically blended high-frequency trading with more traditional long-short stock investing styles, returned more than 26 percent, the person added. (Citadel removed the high-frequency trading component from the Tactical fund in April 2014.) The figures were being shared with Citadel's investors on Monday night.
The results don't amount to a banner year for Citadel, whose Tactical Trading book in particular has seen better annual returns in the past, but they are notable at a time when the average hedge fund has generated far poorer results. The HFR composite index, which tracks a large basket of hedge funds, returned just 3.6 percent for the year 2014, for instance, even as the S&P 500 index was up 11.4 percent.
As individual hedge-fund performance numbers trickle in throughout January, the industry's high fees and light regulation – characteristics that seem less forgivable to some investors at a time of lackluster profits – are in question.