John Paulson's $5bn profit 'largest in investment history'

John Paulson, the hedge fund guru who made a fortune betting against US subprime mortgages, was at it again last year after racking up mammoth personal profits of $5 billion (£3.1 billion).

The haul surpasses the riches he made betting on the collapse of the US housing market in 2007, according to the Wall Street Journal.

Paulson landed a $1 billion return on his stake in Citigroup after shares in the bank recovered 50% over the past year, while his fears over the potential weakness of the dollar also prompted big bets on gold, which jumped sharply last year.

He also made successful bets on emerging markets and US treasury bonds.

The huge profits - possibly the largest in investment history - were generated largely by the sheer scale of the $36 billion in assets under his control, with part of the returns coming from his 20% performance fee for the year.

In another bonus for Paulson, the profits are treated as long-term capital gains, attracting a lower rate of tax.

Paulson is worth an estimated $12 billion and ranked number 45 in the Forbes billionaires' list. Other major hedge-fund chiefs including Appaloosa Management founder David Tepper and Bridgewater Associates' Ray Dalio are also likely to have racked up profits of up to $3 billion between them, the newspaper added.