Mr. Ericsson left Citadel in June, but he won’t start at Millennium until September. Firms like Millennium, which manages about $50 billion, are offering such enormous pay packages that traders like Mr. Ericsson are willing to sit out more than a year before starting a new job. Firms often require former employees to go on “garden leave” before starting a new job so that they don’t take information with them to a competitor, but the waiting period is much shorter.
Mr. Ericsson referred inquiries to a spokesman for Millennium, Guy Potvin, who said in a statement that the compensation figures Mr. Ericsson had quoted to associates were inaccurate, but declined to specify further.
Millennium has offered other new hires guaranteed pay approaching $60 million, according to people briefed on the confidential arrangements. In some cases, the large numbers compensate for money that traders leave behind when they move to a new firm.
Last year, stocks fell nearly 20 percent, while returns in the hedge fund industry overall fell only 4.2 percent. But firms that use multiple trading strategies went in the opposite direction, generating returns of 9 percent, according to a research report from UBS.
Some hedge funds have a dedicated investment style — say, investing only in stock markets for the long term. But hedge funds like Citadel and Millennium often invest using multiple strategies at the same time — or have multiple money managers direct funds to different assets like stocks, bonds or oil. That allows them to pull money in and out of those investments swiftly based on their read of market movements and economic trends. One right call can sometimes make up for losses elsewhere.
For instance, Citadel told investors that it earned a $16 billion profit because various bets on the direction of stocks, commodities and fixed income paid off at the same time.
Investors in hedge funds, like pension plans, endowments and wealthy individuals, are lining up to put their money into the most successful firms, according to industry experts. That is especially so because firms like Citadel substantially outperformed the broader market in 2022.