(Bloomberg) -- Citadel invited clients to cash out profits after a roughly 15% gain in its flagship strategy last year, but the vast majority opted to keep their money in the multistrategy hedge fund.
The elective profit distribution offered in recent weeks had few takers, according to a person familiar with the matter. Out of billions of dollars in profits Citadel made last year, only about $300 million is exiting the firm, the person said, asking not to be identified because the details are private.
The latest proposal differed from recent years, when Citadel required investors to redeem profits rather than making it optional. The firm, which manages $66 billion of assets, previously gave clients the choice of whether to redeem profits but hasn’t done so in recent years.
A representative for Citadel declined to comment.
The ability to keep profits with high-performing hedge funds is a boon for investors, who are increasingly running out of options to allocate money to the most desired investment firms. The vast majority aren’t taking new money, and some are even returning capital.
D.E. Shaw & Co. is preparing to hand back billions of dollars to external clients after two of its biggest hedge funds produced double-digit returns last year.
Influential Force
Citadel regularly returns profits — a total of $25 billion since 2017 — and the firm hasn’t been actively raising money for years. Its billionaire founder, Ken Griffin, recently told Bloomberg that the growth of multistrategy hedge funds was boosted by billions of capital returns to investors.
Multistratregy funds, which rely on teams of traders to make money, 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 has made them the most influential force in the $4.5 trillion hedge fund industry.
Citadel’s main Wellington hedge fund made money last year across all five strategies — equities, fixed income and macro, commodities, credit and convertibles and global quantitative strategies.
(Updates with additional context starting in fifth paragraph.)
©2025 Bloomberg L.P.