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Citadel to return US$5bn of profits to investors in 2026
Hedge fund Citadel will reportedly return around US$5 billion (A$7.47 billion) in profits to investors at the beginning of 2026, in a bid to lower its assets under management. The fund will begin 2026 with $67 billion in assets after returning these profits, CNBC reported. Including the $5 billion slated for 2026, it has returned $32 billion to investors since 2017. This $5 billion does not comprise all of Citadel’s profits during the year, and the goal is to constrain the hedge fund’s capital, CNBC’s source said. Citadel’s flagship Wellington fund gained 1.4% in November, per Reuters, and had increased by 8.3% across 2025 to date. Its Global Equities fund was also up 13.2% in 2025’s first 11 months, while its Tactical Trading fund grew 16.3% and its Global Fixed Income fund rose 8.5%. Last year, Citadel reported the largest net gains of any hedge fund since inception, at $83 billion. Global hedge fund capital reached a record $4.98 trillion last quarter, according to a Hedge Fund Research (HFR) report. “This historic growth has been driven by a combination of powerful trends, including accelerating M&A, expanding cryptocurrency investment, falling geopolitical risk, expectations for lower interest rates, and
Investing
Outperformance: Goldilocks markets lift hedge funds 15%
Heightened market turbulence, underpinned by a wide variation in the performance of individual assets, macro volatility, and higher interest rates have created conditions just right for typically high-fee charging global hedge funds to prove their worth. While they don’t always get it right, global hedge funds try hard to earn their keep – through superior stock-picking and quant strategies – when the going gets tough. Ultimately, what hedge funds are trying to do is to align their own interests, a la through higher fees, with their investors’ by significantly outperforming broader market indices. Figures for 2025 through to the end of November suggest global fund managers are finally in the money with returns up around 15%, according to a recent Goldman Sachs report. Hedge funds outpace multi-strategy rivalsThanks largely to chunky gains in healthcare and a tilt toward United States markets, hedge funds have outpaced several big multi-strategy rivals and even major stock indexes. A granular look at Goldman’s data suggests that in November, long and short funds demonstrated resilience by navigating a sharp selloff in technology stocks to post gains of 1.1%. These hedge funds outperformed major indices such as the S&
Investing
EM assets shine as developed market risks rise
With developed markets currently confronting rising debt, stubborn inflation and political uncertainty, investors have, almost by default, been forced to reconsider the notion of emerging market (EM) risk with a view to capitalising on the greater return prospects they’re now offering. It’s not just EM equities that have been luring investors, with EM debt having also performed well over the past five years compared to their developed market peers. It’s low debt and fast GDP growth that appear to be underpinning EM outperformance, with debt forecast to be 60% lower than developed markets in 2025, while emerging market bond yields are 70% higher. Interestingly, the risks now being ascribed to developed markets coincide with stronger investment opportunities now evident across emerging markets. This year, EMs have outperformed the U.S. with a one-year return of 21%, and the bulk of this performance has surprisingly occurred since the U.S. ‘Liberation Day’ tariff announcement on 2 April 2025.Drivers of EM outperformanceIn addition to geopolitical shifts, Stefan Magnusson, EM portfolio manager at fund manager, Orbis in Hong Kong, believes there have been two primary drivers for this outperformance. One is the enhanceme
Investing
Alphabet stock surges on news of Berkshire stake
Shares in Alphabet Inc raced to a new high after Berkshire Hathaway revealed a small stake in the technology giant. Warren Buffet’s holding company said it owned 17.85 million Alphabet shares on 30 September, representing 0.14% of Google’s parent company. Alphabet Class C (NASDAQ: GOOG) shares rose $8.62 (3.11%) to close at $285.60 on Monday (Tuesday AEDT), capitalising the Magnificent Seven company at US$3.44 trillion (A$5.26 trillion), after earlier reaching a peak of $294.52. Berkshire Hathaway’s Alphabet stake, worth $5.09 billion at the closing price, was the largest new investment by Berkshire Hathaway in the third quarter of the 2025 financial year. It is one of the last major purchases and a rare investment in the technology sector by Warren Buffett, the 95-year-old billionaire known as the Oracle of Omaha for his outstanding track record, sage advice and long-time business base. "The stake purchase of a tech company may represent a different type of mentality at Berkshire, though it's not a total departure from its value-investing model," Interactive Brokers Chief Strategist Steve Sosnick was quoted saying in a Reuters article. Berkshire disclosed the holding in a filing with the U.S. Securities and Exch
Investing
Big Short investor accuses AI giants of inflating profits
Michael Burry, the investor immortalised in the movie “The Big Short”, has pointed the finger at some of America’s biggest tech firms for using creative accounting to overstate profits fuelled by the artificial intelligence (AI) boom. In a post on X on Monday, the Scion Asset Management founder claimed that so-called “hyperscalers” — the major providers of cloud and AI infrastructure — are understanding their depreciation costs by making unrealistic assumptions on how long their chips will last. Burry argues that pushing out the estimated lifespan of computing equipment - which artificially boosts earnings - is one of the more common financial manipulations of modern times. Despite hyperscalers rapidly increasing capital spending on Nvidia chips and servers — which typically have a two- to three-year life cycle — Burry claims they’ve all extended their depreciation timelines. By doing this, Burry estimated that between 2026 and 2028, this accounting practice could have understated depreciation by up to $176 billion, hence inflating reported profits across the tech sector. He singled out Oracle and Meta, suggesting their earnings might appear 27% and 21% artificially higher than they really are by 2028. CNBC rea

Investing
Explainer: Private and public companies
The distinction between public and private companies is important in the world of business and investing. Each differs in ownership, access to capital and regulatory insight, but still both need to meet certain regulations. So what are the main differences between the two, and how do they operate?How do each operate?Public companies sell shares and operate on the public stock exchanges, such as the NYSE, NASDAQ or ASX. These kinds of companies are normally beholden to keeping shareholders happy and consulting them in their decisions. University of Melbourne Professor in Management and Marketing Daniel Samson suggests that public companies' duty to their shareholders is both an advantage and a drawback. “Public companies that are listed on stock exchanges have the great benefit of being able to raise capital, for example, by publicly issuing shares and bonds,” Samson tells Azzet. “They also have to spend quite a lot of time and resources on their disclosure processes, knowing that what they do and how well they do will be scrutinised in detail by analysts in the market. “Their activities are examined not only by those who are interested in their financial performance from an investment perspective, but also by
Investing
Small-caps offer compelling value and growth case
With fund inflows tending to concentrate on the same rogues gallery of large-cap names, being a contrarian investor and not following the money trail - into already crowded trades - may be a productive strategy worth pursuing. With heavy passive fund inflows having reshaped Australia’s equity market over the last decade, InvestmentMarkets CEO Darren Connolly believes there’s never been a better time for active investors to consider small caps where sentiment is weak, while the fundamentals remain robust. The combined trading activity of retail investors can move the dial on small cap stocks – albeit it up or down - that bigger investors tend to avoid, and often due to institutional or regulatory issues. To put the surge in passive capital into context, more than $160 billion is now invested in ASX-listed ETFs - up fivefold in 10 years – a trend that is unlikely to unravel any time soon. Against that backdrop, Connolly claims there are rich pickings to be found within lower liquidity market segments - that, despite oozing value - appear to have been left behind. What Connolly is now witnessing on the InvestmentMarkets platform is a notable shift in investor behaviour. “We’re seeing self-directed investors pair lo
Investing
Explainer: The VIX and what it means for investors
A dramatic rise in the United States Volatility Index (aka the VIX), often dubbed Wall Street’s ‘fear gauge’, suggests that investors are spooked by the most turbulent stretch for equity markets since U.S. President Donald Trump’s fated Liberation Day tariffs were announced early April. As a popular measure of the share markets' implied volatility expectation based on S&P 500 index options, the Cboe Volatility Index, or VIX rose as high as 28.99 on Friday – its highest level in six months. As a result, investors piled into options contracts against the S&P 500 - as a hedge against market declines - that would pay out if the VIX surges to 47.5 and 50. Admittedly, the VIX - Wall Street's most watched gauge of investor anxiety - is now trading at 20.78 but analysts are concerned that recent spikes portend of upcoming market downturns. According to IBD research, when the VIX rises more than 20% above its 10-day moving average, it often signals a positive reversal in the market. The signal has occurred several times this year, including 7 April, 23 May, 13 June, 1 August, and 2 September. Each time, the S&P 500 made a low or was near a low. How the Vix and S&P 500 are linkedFor starters, what the VIX actually does is tra
Investing
Insights: Has the small-caps bull case run its course?
The pace at which ASX-listed shares have advanced in recent months suggests a growing void between large and small-cap stocks, and this has become even more evident since August, with trend lines suggesting the emergence of two-speed growth for equities. Admittedly, it’s no secret that small caps have been leaving their large cap counterparts in the dust for a while now. After all, the Small Ords Index is up 18.5% over one year while the ASX 200 is up 7.7% over the same time frame. However, the degree to which the two indices have been diverging has been widening in the last few months. The ASX 200 has struggled to move 4% higher since early August, while the Small Ords Index is up around 13% on the back of lower interest rates, better economic signals and earnings expectations that exceed those of large caps. This is a complete reversal of the 23% underperformance experienced by small caps in the three years after Covid, when interest rate rises, inflation and small cap earnings downgrades attracted investors to more liquid large cap stocks. While the recent recovery staged by small-cap stocks has been well supported by the market, there’s now growing concern that this part of the market is looking a little topp