"The Battle of Multi-Strategy Funds": P72 earned 19% last year, outperforming Citadel and Millennium, continues to return money and increase fees
In comparison, Citadel achieved a return of 15.1% in 2024, while Millennium obtained a return of 15%. With higher returns, lower volatility, and stock correlation, multi-strategy funds have become the "new favorite" in the hedge fund industry in recent years. Asset management companies are also facing the problem of increasingly surplus investment funds and have begun to gradually limit asset sizes. P72 stated that it will return $5 billion to investors this year
P72 performance leads the way, promising to return $5 billion to investors.
According to sources familiar with the matter, Point72, the asset management giant owned by Steve Cohen, achieved an approximate 19% return in 2024, surpassing the industry average and competitors like Citadel and Millennium Management, with an increase of about 8.4 percentage points compared to its 2023 return.
In comparison, Citadel achieved a 15.1% return in 2024, while Millennium garnered a 15% return, and another large multi-strategy fund, Balyasny, achieved a 13.6% return. The comprehensive hedge fund index compiled by research firm PivotalPath recorded a 10.8% increase in 2024, while the total return of the S&P 500 index was 25%.
P72's outstanding performance has also raised a question: investor capital congestion. As of mid-2024, P72 managed assets totaling $35 billion.
According to sources, the company has informed clients that it will return approximately $3 billion to $5 billion in profits to them in early 2025 and plans to increase management fee rates.
Wall Street Journal previously mentioned that multi-strategy/multi-manager hedge funds allocate capital to multiple portfolio managers ("PMs" or "teams"), with PMs independently managing this capital, employing a strict portfolio construction and risk management framework, focusing on generating consistent alpha, and typically being compensated based on their individual performance rather than the aggregate results of all PMs.
Over the past five years, multi-manager hedge funds have generated higher returns compared to the broader hedge fund and multi-strategy (non-multi-manager) fund composite, with significantly lower volatility and stock correlation, becoming the "new darling" of the industry.
Led by Citadel, five giants form the top tier of multi-manager funds:
Reports indicate that Cohen has recently decided to stop trading his own portfolio to focus on managing and developing P72. He has also recently hired Todd Hirsch, a former executive from the world's largest asset manager, BlackRock, to lead the company's foray into the private credit sector.
As multi-strategy funds gain popularity in the market, asset management companies are facing an increasing problem of excess capital and are beginning to consider limiting asset sizes. It is reported that companies like Millennium are allocating billions of dollars to external hedge funds, while Citadel also decided in previous years to return billions of dollars to clients