FILE PHOTO: Ken Griffin, Founder and CEO, Citadel, speaks during the Milken Institute’s 22nd annual Global Conference in Beverly Hills, California, U.S., April 30, 2019. REUTERS/Mike Blake
NEW YORK (Reuters) – Citadel’s commodities investments are up at least $1 billion for the year, according to three sources familiar with the matter, helping to drive strong overall performance at one of the world’s largest hedge funds.
Citadel, which manages more than $30 billion in assets, has profited from a strong performance in European natural gas and power trading, two of the sources said. Its flagship Wellington fund has gained more than 15% this year through October, one source close to the fund said.
A spokesperson for Citadel, led by Chicago billionaire Ken Griffin, declined to comment.
British and Dutch gas prices, benchmarks for Europe-wide gas sales as well as some liquefied natural gas (LNG) markets, lost half their value from September 2018 through October 2019. They hit 10-year lows in June, weighed down by an influx of LNG and gas supplies from Russia, the United States and others.
Citadel’s hedge funds invest across asset classes such as equities, fixed income and credit. Commodities, one of Citadel’s five core investment strategies, invests in both financial and physical markets.
Hedge fund industry returns have been muted in recent years prompting some big names to wind down operations, such as Jamison Capital’s macro fund, T. Boone Pickens’ BP Capital and Andy Hall’s main hedge fund at Astenbeck Capital Management.
Citadel is among a handful of multi-strategy funds that have performed well despite the challenging commodities trading environment.
Industry returns have averaged about 5%, according to the Hedge Fund Research (HFR) asset weighted composite index while returns in the HFR macro commodity index have averaged gains of about 4% year-to-date.
Earlier this month, Citadel named firm veteran James Yeh president and co-chief investment officer for Citadel’s hedge fund business, effective Jan. 1, 2020, according to a letter seen by Reuters.
Reporting by Devika Krishna Kumar in New York; additional reporting by Lawrence Delevingne