Global hedge funds witnessed the strongest returns in November 2023 since January with an overall average weighted return of 3.3%, according to data.
According to data from alternative investment asset servicer Citco group of companies, over 75% of funds experienced positive returns, marking a significant rebound from October’s 36.4%.
Citco’s funds led the pack with an overall weighted average return of 3.3%, spearheaded by equities funds at 5.1%. Multi-strategy and fixed income arbitrage funds followed closely, achieving 2.5% and 2%, respectively.
Despite this overall success, commodities funds remained in negative territory with a weighted average return of -0.4%, reflecting the ongoing challenges for resource-focused strategies. On a fund size basis, all strategies enjoyed positive returns in November. Funds in the $200-$500 million range were top performers, boasting a weighted average return of 3.9%, closely trailed by the largest funds exceeding $3B with a 3.4% return.
November witnessed a reversal of capital flows, with net outflows totalling $2.9 billion. Equities funds were the primary driver of redemptions, experiencing $4.8 billion in outflows, overshadowing $900 million in subscriptions. Conversely, multi-strategy and hybrid funds attracted net inflows of $500 million and $400 million, respectively, indicating sustained investor interest.
Regionally, Asian funds experienced the highest net outflows of $3.2 billion, while European funds saw net outflows of $100 million. In contrast, US-based funds bucked the trend, attracting net inflows of $400 million.
Looking ahead to the final quarter, projected net outflows have widened to $25.2 billion, with December expected to see heightened activity as investors position themselves for 2024.
According to Citco, global infrastructure investment is poised for substantial growth, driven by long-term trends such as energy transition and population expansion. Established alternatives managers are increasingly venturing into infrastructure for the first time, enticed by the investment potential, it added. However, newcomers must navigate operational considerations, including establishing appropriate fund and fee structures, effective cash management and securing access to suitable technology platforms.
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