Why Does Ken Griffin Still Credit People for Citadel's Returns?

Ken Griffin says the vast majority of the alpha Citadel creates is still a testament to the creativity, the ingenuity, and the analysis of the people who conduct fundamental research. AI can help shed light on bits and pieces of the work. A person still assembles the narrative.

About a year and a half ago, Ken Griffin said AI cannot produce or deliver alpha. Asked whether his thinking has changed, he says most of the business is fundamental based investing and the core is research, almost like journalism: getting the story right and getting the narrative right. Trading is how Citadel monetizes the research. The team has to understand the business model, the economics, and management incentives. A person still decides what multiple to ascribe to future cash flows or future earnings and how the idea compares with other places to deploy capital. Ken Griffin still firmly believes the vast majority of the alpha is a statement or testament to the creativity, the ingenuity, and the analysis of the people on the team. Trading has become the most automated and most technologically forward-leaning part of the work, because monetizing research well lets Citadel run bigger positions and extract more alpha from ideas. Efficient trading is how a portfolio manager maximizes the return on the research.