Citadel’s commodity portfolio is up at least $1 billion a year

Citadel’s commodity portfolio is up at least $1 billion a year, according to three individuals familiar with the situation, helping drive strong overall success at one of the biggest hedge funds in the world.

Citadel, which controls more than $30 billion in assets, has benefited from good European gas and electricity trading results, two sources said. Wellington’s flagship fund has gained more than 15% through October this year, said one source close to the fund.

A Citadel spokeswoman, headed by Ken Griffin, a billionaire from Chicago, declined to comment.

British and Dutch gas prices < TRGBNBPD1>, indexes for Europe-wide gas sales and some LNG markets, lose half their money from Sept 2018 to Oct 2019. In June, they reached 10-year lows, weighed down by an explosion of Russian, US, and other LNG and gas imports.

Hedge funds from Citadel compete through asset classes such as debt, fixed income, and credit. Commodities, one of the five core investment strategies of Citadel, spend in financial as well as physical markets.

Throughout recent years, the returns from the hedge fund industry have been subdued, causing several big names to wind down activities, such as the macro fund of Jamison Capital, T. Boone Pickens ‘ BP Capital and Astenbeck Capital Management’s key hedge fund for Andy Hall.

Citadel is one of several multi-strategy funds that have done well given the tough market climate for commodities.

Industry returns have averaged about 5%, while returns in the HFR macro commodity index have averaged gains of about 4% year-to-date, according to the Hedge Fund Research (HFR) asset-weighted composite index.