January 20, 2012 / 9:24 PM / in 6 years

Citadel's main hedge funds clear high-water mark

BOSTON (Reuters) - Hedge fund titan Citadel, whose main funds lost roughly 50 percent during the financial crisis, has now fully recovered and will again be able to charge performance fees, its founder told employees on Friday.

“I am pleased to report that as of January 17, 2012, Citadel’s Kensington and Wellington funds crossed their respective high water marks,” Kenneth Griffin said in a memo, a copy of which was seen by Reuters.

Hedge funds typically promise investors that they will return to their highest levels after a fall before they can resume charging performance fees, which typically amount to about 20 percent of all gains.

At Citadel, strong returns in the first days of January when the main funds rose about 2.5 percent finally helped the firm clear its high-water mark. Ever since the financial crisis, the Chicago-based firm has steadily climbed out of its hole, delighting investors with returns of around 20 percent last year.

Those numbers helped Griffin’s funds stand out in 2011 when the average fund lost 5 percent as managers faced wild market swings when Japan’s nuclear disaster hit and Europe’s debt crisis worsened.

In his a year-end letter to investors, which was also seen by Reuters, Griffin said top-notch people, hard work and a “relentless focus on monetizing our ideas” have helped the firm regain its footing.

Reporting By Svea Herbst-Bayliss

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