Hedge funds have enjoyed their first quarterly net inflows since early 2022, continuing their winning streak into the second quarter of 2024, according to asset servicer Citco’s data.
Equity and global macro funds emerged as strong performers, contributing to seven consecutive quarters of positive returns. Citco reported a weighted average return of 1.09% in Q2, bringing the year-to-date (YTD) return to 7.62%. About 80% of funds have recorded positive returns this year.
Global macro and equity funds were standout performers in Q2, with weighted average returns of 2.26% and 2.25%, respectively. Their results brought YTD performance to 7.45% for global macro funds and 10.86% for equity funds. Other strategies like a commodity, fixed income arbitrage and multi-strategy funds also posted positive returns, with Q2 gains of 1%, 0.53%, and 0.09% respectively. YTD, commodities have returned 3.66%, fixed income arbitrage 0.8%, and multi-strategy 5.93%.
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Positive returns were recorded across all asset under administration (AuA) categories except for the smallest funds. Top performers were funds with $1-$3 billion of AuA, achieving a 1.49% return in Q2, followed by those with $550 million-$1 billion at 1.39%. Larger funds (over $3 billion) posted 1.11%, and funds with $200-$500 million just managed to stay positive at 0.09%. On a YTD basis, the largest funds led with an 8.18% return, trailed by the $1-$3 billion category at 8.07%, and the $500 million-$1 billion group at 6.54%.
The second quarter saw hedge funds receiving $4.7 billion in net inflows, with April and May subscriptions outpacing June redemptions. Inflows in April and May were $6.6 billion and $7.1 billion, respectively, outweighing June’s $8.9 billion redemptions. Strategies like hybrids, which had net inflows every month of Q2 totalling $6.5 billion, continued their popularity. Multi-strategy funds attracted $1.3 billion, fund of funds $1 billion, and fixed income arbitrage $0.5 billion.
Treasury volumes set another record, nearing 150,000 trades, with a 4% increase quarter-on-quarter, totalling 147,267 trades.
Declan Quilligan, head of hedge fund services at Citco Fund Services (Ireland) Limited, said: “The return to net inflows is significant. Hedge funds had seen a period of net inflows before 2022, and we are now witnessing a revival as investors seek options amid potential economic policy shifts later this year. There are ample opportunities for investors in the diverse hedge fund market.”
