Citadel Advisors is a large hedge fund manager located in Miami with additional offices around the world. Founded by Kenneth Griffin, Citadel was rated as the No. 1 money manager in the world in 2023 by Leveraged Capital Holdings (LCH).
Because Citadel, which is a fee-only firm, solely manages the investments of hedge funds, it does not provide financial planning or consulting services to any clients. The firm also doesn't not directly serve individual clients. Instead, it provides portfolio management to private investments. So if you're an individual interested in traditional advisory services, try looking for a financial advisor through SmartAsset's free advisor matching tool.
Citadel Advisors Background
Griffin founded Citadel Advisors in 1990, and the firm has since grown into a multinational investment advisory business with several affiliate organizations. Griffin, a billionaire, remains the firm's CEO.
According to LCH's Great Money Managers report, Citadel Advisors has posted $74 billion in net gains since its inception – more than any other manager on the list.
What Types of Clients Does Citadel Advisors Accept?
Citadel is a hedge fund manager, so its services are restricted to private investment funds (referred to in the firm's SEC filings as "pooled investment vehicles"). Citadel currently has 27 such funds. While Citadel doesn't directly manage the assets of any clients outside of these funds, several different types of institutional investors and accredited investors invest in the funds.
Citadel Advisors Minimum Account Size
The minimum amount of investable assets required to invest in one of Citadel's funds is $10 million. The firm and its advisors may waive these minimums at their discretion, though.
Services Offered by Citadel Advisors
As a hedge fund, Citadel limits its services to private fund management. As mentioned earlier, Citadel does not provide financial planning services or portfolio to individual clients. The firm has a number of proprietary investment strategies at its discretion that it applies to these private funds' portfolios.
Citadel Advisors Investment Philosophy
Citadel uses a wide variety of investment strategies to drive growth in their funds. Advisors may take long or short positions across a vast range of investment securities. The firm bases its investment decisions on fundamental research and quantitative analysis. As a general rule, all funds look to mitigate risk as much as possible.
Investment strategies at Citadel include:
- Equities: Focuses on equity securities of global companies using both long and short relative value positions.
- Fixed-Income & Macro: Focuses primarily on global currency, equity and fixed income market investments. The firm utilizes a wide range of investment instruments to pursue growth within this strategy.
- Commodities: Focuses on a wide range of commodity markets, including but not limited to power, natural gas and agricultural products. This strategy involves trading physical commodities as well as their derivatives.
- Credit: Focuses on corporate debt, equity and other securites on a global scale. This strategy also utilizes both long and short relative value positions.
- Quantitative strategies: Focuses on fixed-income, currency, equity and commodity investments on a global scale using primarily statistical and quantitative modeling as well as predictive analysis.
- Third-party managers: Portfolio managers occasionally allocate part of certain funds' assets to investment managers outside their firm.
Fees Under Citadel Advisors
Citadel Advisors does not have a general fee schedule, and fees vary by fund. Each fund covers its own expenses, including direct costs related to investment activities. Some funds pay a management fee, typically 1% of net asset value, which offsets performance-related fees.
Additionally, funds reimburse Citadel’s service entities for administrative costs. Citadel may also charge withdrawal fees in certain cases, and third-party services, like fund administration, incur separate fees. Performance fees are calculated based on fund gains above a high-water mark, incentivizing Citadel to maximize returns.
What to Watch Out For
Citadel does not have any disclosures listed on its Form ADV.
Since Citadel takes performance-based fees, advisors may have an incentive to pursue more speculative investment strategies in an effort to generate a higher return, and therefore a higher performance fee. This is a potential conflict of interest. That being said, the firm is bound by fiduciary duty, meaning it is obligated to act in clients' best interests at all times.
In February 2021 Citadel officials were summoned to testify before Congress, as were other financial executives, regarding the GameStock short squeeze. Specifically, some lawmakers expressed concern over a possible conflict of interest between the Citadel Advisors, which invested $2 billion in Melvin Capital to help it recover from its GameStop losses, and Citadel Securities, which profited from Robinhood's payment-for-order flow. Citadel had not been charged formally with any wrong-doing as of July 2021.
Opening an Account With Citadel Advisors
If you're interested in investing in a Citadel Advisors fund, call the firm at (305) 929-6851.
Citadel is headquartered in Miami but also has offices in New York City; London; San Francisco; Hong Kong; Dallas; Dublin, Ireland; Houston; Boston; Shanghai; Toront; and Greenwich, Connecticut. Your proximity to an office location does not impact your ability to invest in one of the firm's funds.
All information is accurate as of the writing of this article.
Tips for Your Investment Portfolio
- While hedge funds are an option for accredited investors, individuals without a high net worth may benefit from more traditional investment advisory services. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can have free introductory calls with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- The one downside of seeing big returns from the market? If your investments aren't in a tax-advantaged retirement account, you'll have to pay taxes on your earnings. Try SmartAsset’s capital gains tax calculator to see what you'll owe.
