Citadel portfolios gain in March despite banking crisis

By Svea Herbst-Bayliss

NEW YORK (Reuters) -U.S. hedge fund Citadel, which earned a record $16 billion profit in 2022, reported gains in its four portfolios last month when the failure of Silicon Valley Bank and Signature Bank triggered a market selloff that left many rivals with losses.

The Citadel Wellington fund, the firm’s flagship portfolio, ended the month with a 1.38% gain, leaving it up 4.19% for the first quarter, an investor in the fund said.

A Citadel representative declined to comment.

Most hedge funds are still compiling March and first-quarter numbers, but preliminary reports from research firm Hedge Fund Research show the average hedge fund was off 1% last month and ended the first quarter flat.

Macro and trend-following hedge funds dropped 3.2% this month through March 29, while algorithmic commodity trading advisor funds (CTAs) dove 6.8%. Those funds are down 2.7% and 6% for the year through March 29, respectively, investors and research groups reported.

Funds like Citadel that pursue a number of investment strategies fared better, investors and data suggest.

Citadel’s Tactical Trading fund gained 2.18% last month and is up 5.46% in the first quarter, while its Equities fund climbed 2.16% last month and is up 4.56% in the first three months of 2023. The Global Fixed Income fund reportedly was flat in March and gained 1.77% in the first quarter, the investor said.

Point72 Asset Management, another multi-strategy fund, gained 1.33% in March and is up 2.85% for the year, another investor said. Millennium International was off 0.15% in March and is up roughly 0.4 pct in the first quarter, a third investor said.

Representatives for the funds declined to comment.

Investors in March were spooked by the failure of the SVB and Signature Bank, which triggered a broader crisis among regional banks as rattled customers tried to pull out money. Citadel was among a number of large investors that swooped in to buy shares in the smaller banks and send a signal of confidence.

The broader stock market recovered in the second half of March, with the S&P 500 ending the month with a 3.5% gain, pulled higher by Apple and Microsoft. The S&P 500 ended the first quarter with a 7.1% gain.

(Reporting by Svea Herbst-Bayliss; additional reporting by Nell Mackenzie and Carolina Mandl. Editing by Paul Simao)