Citadel Returns Money to Some Global Hedge-Fund Clients

  • Having too much money to manage can hamper funds’ performance
  • Citadel’s move comes amid a revival in hedge funds’ fortunes

Ken Griffin

Photographer: Jonathan Alcorn/Bloomberg

Ken Griffin’s Citadel LLC is returning capital to some of the clients in one of its multistrategy hedge funds as it seeks to tighten up its investor base, according to people with knowledge of the matter.

Some of the investors, particularly funds-of-funds, will receive all their money back from the Citadel Kensington Global Strategies Fund by the end of the year, the people said, asking not to be identified because the information is private. Others will get back a portion of their investment, one of the people said.

“We have routinely made profit distributions, in whole or in part, across a number of our funds over the past 20 years,” Zia Ahmed, a spokesman for Citadel, which oversees $27 billion, said by email.

Hedge funds sometimes return part of their capital because managing too much money can hurt performance. As investors, funds-of-funds are generally viewed as less sticky -- or long term -- than institutions such as pension funds and endowments.

Chicago-based Citadel’s move comes amid a revival of interest in hedge funds which has made some of the best-performing managers more selective about what clients they take in. Hedge funds raised $13.4 billion in August, the second-largest monthly amount in two years, boosting net inflows for the year to $39 billion, according to data provider eVestment.

This marks a turnaround from 2016, when investors pulled $112 billion amid mediocre performance.

Citadel’s main Wellington and Kensington funds gained 9.2 percent this year through August. Its Global Equities Fund was up 6.8 percent.

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