"Multi-strategy hedge fund giants Citadel and Millennium posted returns slightly above 10% in 2025, underperforming smaller peers."

The two multi-strategy hedge fund giants, Millennium and Citadel, delivered returns of just over 10% to investors in 2025, but their performance lagged behind several smaller peers in the sector.

On January 2, according to the Financial Times, Millennium led by Izzy Englander and Citadel under Ken Griffin rebounded after brief losses in the first half of the year, posting annual gains of 10.5% and 10.2%, respectively. Earlier in the year, both firms briefly fell into negative territory due to market turmoil triggered by Trump’s tariff policies.

In contrast, smaller multi-strategy hedge fund ExodusPoint achieved an annual gain of 18%, while Schonfeld’s flagship fund rose 12.5%, both markedly outperforming the two giants.

Analysts pointed out that this divergence in performance highlights changes in the competitive landscape of the multi-strategy hedge fund sector. Although the industry has dominated the hedge fund market over the past several years, the performance gap between institutions of different sizes is widening.

It is noteworthy that in the broader hedge fund field, macro strategy funds saw their best performance in 2025 since 2008. Bridgewater’s Pure Alpha hedge fund rose 33% as of December 29, marking its highest annual return since the firm was founded 50 years ago.

Steady Recovery for the Two Giants in the Second Half of the Year

The recovery of Millennium and Citadel was mainly due to consistent and stable returns in the second half of the year.

According to the Financial Times, sources revealed that, after the market turbulence in the first few months of 2025, both firms achieved a turnaround through rigorous risk management and diversified trading strategies.

Improved market conditions supported the rebound. Trump abandoned many of his most aggressive tariff measures mid-year, fueling strong gains in stock indexes by the end of the year. The S&P 500 and FTSE 100 indices rose 16.5% and 21.5% in 2025, respectively.

Analysts believe that the lower market volatility and subsequent upward trend created a more favorable trading environment for multi-strategy funds.

In the multi-strategy hedge fund sector, smaller institutions held a clear advantage in 2025. ExodusPoint led with an 18% return, about 8 percentage points higher than the two giants. Schonfeld’s flagship fund’s 12.5% gain also beat Millennium and Citadel.

This difference in performance has sparked discussion on the relationship between size and returns. Multi-strategy hedge funds achieve diversification by operating hundreds of trading teams across equities, bonds, commodities, and other asset classes, but expansion in scale may affect strategy flexibility and execution efficiency.

Advantages and Costs of the Multi-Strategy Model

Over the past decade, multi-strategy hedge funds have risen to the top of the industry, with their business model built on strict centralized risk controls and high leverage. These firms usually require traders to swiftly exit losing positions, aiming for disciplined risk management to deliver consistent returns.

However, this model comes with a higher cost structure. Multi-strategy funds charge investors higher fees than traditional hedge funds, and pass on expenses such as bonuses and client entertainment directly.

Nonetheless, this model has generally produced stable returns over the past decade, meeting the demand for steady profits from large institutional investors like pension funds.

These firms do not benchmark against stock indexes such as the S&P 500, but aim to profit both when the market rises and falls. For example, several multi-strategy funds still posted positive returns even during the sharp stock market decline in 2022.

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