Citadel’s Ken Griffin forecasts more market volatility in 2019
Hedge fund billionaire sees potentially lucrative opportunities amid global risks
Ken Griffin, the billionaire founder of the hedge fund Citadel, says he is optimistic about creating lucrative trading opportunities amid what he expects to be a continuation of the heightened volatility that whipsawed financial markets last year.
“The rapidly changing economic landscape and the fast-evolving business landscape across major sectors such as retail, technology and healthcare should provide many opportunities for us to thoughtfully deploy your capital,” he said in an annual letter to investors.
Mr Griffin, 50, pointed to three key macroeconomic risks that the fund would be monitoring: whether there were “constructive” resolutions to the US-China and US-Europe trade disputes; if the EU and the UK can come to a resolution over Brexit; and whether political and economic uncertainty stabilises in Italy.
Citadel, a $29bn multi-strategy hedge fund, was one of the better performers in a tough 2018 for hedge funds. Its flagship Wellington fund was up 9.1 per cent last year, and about 3.6 per cent in January. The group’s global equities and tactical trading funds returned almost 6 per cent and 9 per cent, respectively.
Hedge funds turned in some of the worst-ever performances in the fourth quarter of 2018, although they have rebounded since the start of the new year. Hedge Fund Research’s fund-weighted composite index was up about 3.5 per cent in January, after falling 4.6 per cent last year.
“2018 saw strong economic growth in the United States and Canada, while growth disappointed in the United Kingdom and in Europe,” he said in the letter. “For 2019, economists, in general, have downgraded their global economic growth forecasts, and fixed income markets are clearly pricing in lower inflation expectations.”
Mr Griffin said that the war for talent at hedge funds was intensifying and that they “remain committed to retaining, recruiting and developing the world’s top investment professionals”.
The firm last week hired Samantha Greenberg — a veteran investor specialising in technology, internet and media and consumer equities — to its Ashler Capital unit. Ms Greenberg had been one of the few female portfolio managers running her own hedge fund at Margate Capital, which she founded in 2016 after working as a partner at Paulson & Co.
“We continue to see alpha generated disproportionately by the strongest firms within each investment strategy,” Mr Griffin wrote in the letter. “Firms with the greatest capabilities, the deepest expertise and the most disciplined execution continue to generate significant returns, while firms that falter on these dimensions fall further and further behind.”