Exclusive: Hedge fund Citadel's commodity investments up more than $1 billion this year - sources

By Devika Krishna Kumar

NEW YORK (Reuters) - Hedge fund Citadel's investments in commodities returned more than $1 billion this year, according to three people familiar with the matter, helping to drive strong overall performance for one of the world's largest funds.

Citadel, led by Chicago billionaire Ken Griffin, benefited from gains across the commodities business in oil, power, natural gas and agriculture markets this year, the people said.

Citadel's flagship Wellington fund, which practices a multi-strategy array of investments on stocks, bonds, commodities and other securities using teams of traders, is up by 21.2% this year through November, putting it on track to have its best year since 2012, one person familiar with the matter said.

All five of the fund's core investment strategies have positive returns for the year, the person added.

A spokesperson for the company declined to comment.

Energy markets swung wildly this year as the coronavirus pandemic crushed global fuel demand and created distortions, allowing trading opportunities for hedge funds, oil majors and commodities merchants.

The HFRI Fund Weighted Composite Index - which tracks the performance of the global hedge fund industry - gained 6.2% in November, the strongest monthly gain since December 1999, and is up 7.3% year-to-date.

Multi-strategy hedge funds - those that bet on a broad array of markets using teams of traders, leverage and centralized risk management - in particular have flourished this year.

Citadel, which had about $35 billion in assets under management as of Oct. 1, recently hired a former Glencore energy derivatives trader to head its first commodities trading team in Asia, and recruited former Morgan Stanley commodities trading chief Jay Rubenstein.

The fund also hired Eike Schick, former head of the European natural gas desk at Freepoint Commodities, as a portfolio manager in London, and Mark Tawney, who ran Munich Re Trading, joined the company to lead a weather derivatives team earlier this year.

Last year, Citadel's commodities business was up by at least $1 billion, boosted by strong gains in European natural gas and power trading.

(Reporting by Devika Krishna Kumar in New York; Editing by Alexandra Hudson and Nick Zieminski)

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