Citadel Investment Group, whose two biggest funds fell by some 55 per cent in 2008, is ready to return to investors after starting the new year in sparkling form. It is planning to raise USD2bn for a new macro fund that will make bets on currencies and interest rates and other trades on broad economic trends.
The hedge fund manager is reportedly telling potential investors that the Citadel Global Macro Fund could eventually grow to as much as USD5bn. Meanwhile, Citadel is also planning to launch an equity fund and another focused on convertible bonds.
The macro fund will levy a standard 2 per cent management fee and 20 per cent for performance, along with a 0.25 per cent charge to cover trading and back-office costs. This is fairly modest compared to Citadel's Kensington and Wellington funds, which are reported to have once charged management fees of as much as 9 per cent at their peak.
Last year Citadel, run by 40-year old Kenneth Griffin, cut about 150 jobs as it left investment areas including emerging markets and reinsurance, but the first couple of months of 2009 have brought better fortunes, with the Kensington and Wellington funds up 10 per cent so far this year.
Griffin, who was recently named to the Forbes young billionaires list, has a USD1.5bn fortune. After last year's losses, the Kensington and Wellington funds will reportedly need to make gains of 90 per cent before they can start earning performance fees again, but there's no doubt that Citadel is off to a good start.