Israel England (left) and Ken Griffin. Getty images
In the annual list of Bloomberg of the highest -grossing hedge fund founders published on 20 February, Israel England of Millennium Management and Kane Griffin of Citadel claimed top two places with a personal investment advantage of $ 2.8 billion respectively. Their secret is simple: rent incredibly bright people and take meaningful risks.
Citadale and Millenniums usually chart the most profitable hedge funds in the top list. According to a report by LCH Investments in January, in 2023, Griffin’s stronghold finished fourth with a total profit of $ 8.1 billion and Millennium with $ 5.7 billion.
Hedge funds are alternative investment vehicles that actively manage funds provided by customers, known as limited partners. Unlike mutual funds or traditional asset managers, hedge funds have the freedom to invest in non-traditional assets-such as derivatives, private equity and real estate-and they are allowed to invest with money borrowed and other high-risk strategies. They typically charge 2 percent management fee based on AUM and make a 20 percent deduction from any returns on investment.
Take big risks
Top hedge fund clients employ many strategies to invest money. Firms such as Citadale and Millennium are often called “pod shops” for the operation of several-amazing teams that experiment with various high-risk strategies to obtain unrelated returns from each other. This method, known as the “platform model”, reduces overall instability for a firm.
Such multi-strategy funds have become popular among investors, with property continuously increasing under the Management (AUM) in the “Pod Shop” fund in the last decade. Citadel saw its AUM climbing climbing from $ 14 billion in 2012 to $ 62 billion in 2023, while Millennium AUM increased from $ 17 billion to $ 60.6 billion in the same period. Citadale and Millennium followed the Bridgewater Associates by AUM as the second and third largest American hedge funds by June 2023.
Many hedge funds focus their capital in a handful of areas. The move is taking big risks and is getting correct. In 2023, Citadale allegedly made almost half of his profit from objects. Last year, the most beneficial of Citadale, the firm makes heavy bets on natural gas and power. Sometimes, however, those risks are not paid: In 2008, the main fund of Citadale lost 55 percent. Millennium adopts a uniform approach, and in 2023, there were more than 90 percent of equity holdings overlap with Citadel.
“A passion with talent”
To ensure that risk is worth taking, hedge funds comb college complexes and financial industries for top talent. Sitadale’s Griffin credited the success of his firm for “passion with talent”, as Forbes placed it in 2022 profiles.
Griffin told Forbes that he himself interviewed more than 10,000 candidates, focusing on engineers and mathematicians of top colleges. Both Giffin and Millennium’s England have said that they prefer to hire one of the world’s most reputed investment banks, Goldman Sachs.
Hedge funds offer some of the most paid jobs in finance, especially for young analysts. In the last summer, the stronghold went viral to pay $ 19,000 per month to pay intern. Millennium’s US office does not disclose salary, but its London office paid an average of $ 1.7 million per employee in 2020.
