Citco, the network of independent companies providing asset servicing globally, says most hedge funds administered through its network delivered positive returns in the second quarter of 2025, as markets rebounded from tariff-linked uncertainty triggered in the first quarter.
The overall weighted average return hit 8.3% in Q2, with 77% of funds in the green, according to its data. This took the weighted average return for 2025 to date to 11%, it added
Multi-strategy and equity focused funds stood out in the period, with weighted average returns of 9.8% and 9.2% respectively.
All other strategy groups were positive apart from commodities, where were down -3.2% in the quarter, taking YTD weighted average return to -2.2%.
Another trend noted is that the funds with the highest assets under administration (AUA) – those with more than $3bn AUA – made the highest weighted average return at 10.4%, taking YTD performance to 14.5%.
Hedge fund flows continue to be positive through the quarter. Net inflows hit $10.7bn. Subscriptions at $56.6bn outweighed redemptions of $45.9bn. On a YTD basis, net inflows hit $17.8bn.
Multi-strategy funds achieved net inflows through the quarter of $12.1bn. The previous quarter saw $3.5bn of net inflows.
Trading activity has accelerated since January. Equities, and equity, index, and rates derivatives strategies have dominated trading, while the second quarter experienced the busiest period on record as measured by daily average trading volumes handled by Citco.
Outsourced treasury operations also achieved a record as measured by the number of payments processed by Citco’s middle office solutions team, which rose above 170,000 payments.
Declan Quilligan, head of Hedge Fund Services, Citco Fund Services (Ireland) Limited, commented: “As global equity markets bounced back sharply in Q2 to test new highs, hedge funds have delivered a standout quarter of performance, adding to the positive start to the year.”
“While some strategies have excelled, the consistency of returns that hedge funds are delivering is also eye-catching – Q2 2025 marks their 11th consecutive quarter of positive returns, as they continue to deliver both diversification and returns for investors. Investors are taking full advantage of this, with inflows increasing in Q2, and multi-strategy funds are the clear standout choice so far this year, with inflows outstripping other strategy types.”
Citco’s network counts over $2trn in AUA, with operations spanning across 36 countries.
