Citadel is considering cutting fees on its two main funds as it attempts to attract clients during the worst climate for raising money in two decades, said two people with knowledge of the firm’s plans.
The Kensington and Wellington hedge funds at Citadel, the $11.1 billion firm founded by Ken Griffin, are among a handful that pass along all expenses to clients rather than charging the industry-standard 2% annual management fee. Expenses at the firm have reached as much as 8% of assets, and typically range from 4% to 6%.
Citadel lost 55% of assets as markets tumbled in 2008, and when investors sought to take out $1.2 billion, the firm suspended redemptions before restoring them in late 2009. Even after last year’s 62% return and this year’s 4% gain, the funds would still need to climb about 30% to make clients whole. Assets fell from $13.5 billion a year ago as money was returned to customers.
Citadel also may make it easier for clients to withdraw money from their funds, said the people, who asked not to be named because the information isn’t public. Some investors in the two funds can take out money quarterly, subject to restrictions. Other clients are subject to longer lockups.
Devon Spurgeon, a spokeswoman for the firm, declined to comment on the possible changes.