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  • It was a chaotic 2021 thanks to retail-investor mania and surging demand for private company investments.
  • Managers like Paul Singer’s Elliott Management and Ken Griffin’s Citadel enjoyed banner years.
  • But many macro funds lost money on bets that wrongly predicted the direction of interest rates.

Overall hedge funds did well in 2021 despite fears of inflation and renewed regulatory oversight with a new administration in office.

The industry hit the $4 trillion mark in total assets, according industry data tracker Hedge Fund Research, and fund liquidations in the third quarter fell to their lowest mark since 2006. The average hedge fund made roughly 9% through November, and the space is set for its third straight year of positive returns — comforting investors who were concerned that the industry couldn’t handle volatility anymore.

But 2021 also introduced new variables and players that hedge funds hadn’t battled before. The year started with a short squeeze executed by stuck-at-home day traders and ended with a new coronavirus variant upending plans around the world. An under-the-radar family office started a cascade of events that left banks with billions in losses. Tensions abroad have made global investors weary.

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