New York — Hedge fund giant Citadel is planning to return approximately $5 billion in profits to its investors at the start of 2026, according to a person familiar with the matter. The move is a strategic decision to constrain capital, aligning the firm's assets more closely with its assessment of the market opportunities in the new year.

The capital return follows a strong performance in 2025, with the firm's flagship Wellington multistrategy fund gaining 9.3% through the final week of the year. The distribution will reduce Citadel's assets under management from about $72 billion to $67 billion at the outset of 2026. This disciplined approach to capital allocation is a hallmark of the firm's strategy; including this latest distribution, Citadel has returned a total of $32 billion in profits to investors since 2017.

A Record of Sustained Outperformance

The planned distribution underscores Citadel's position as an industry leader in generating long-term gains. According to LCH Investments, Citadel ranks as the most profitable hedge fund of all time based on net gains since inception. Having generated $83 billion in net gains for investors through 2024, that figure is anticipated to exceed $88 billion in the upcoming January rankings—a testament to a sustained and successful high-stakes strategy.

This decision reflects a calculated strategic pivot by Citadel's management. By proactively returning capital rather than perpetually scaling assets, the firm aims to maintain agility and focus on the most compelling investments, navigating a complex and evolving competitive ecosystem in global markets.

Discipline in a Volatile Landscape

The move highlights a key philosophical difference among major investment firms. While many relentlessly pursue asset growth, Citadel periodically opts for strategic contraction, ensuring its scale does not outstrip the identified opportunity set. This disciplined capital management maneuver is seen as a factor in its ability to deliver consistent, market-leading returns across cycles, reinforcing its reputation for shrewd risk and size management.