Hedge funds recorded their first year of net inflows since 2021 in 2025, alongside their strongest annual performance of the decade, according to data from global fund administrator Citco.
The average hedge fund delivered returns of more than 20% during the year, with almost 90% of funds posting positive performance. Funds administered by the Citco group of companies gained a weighted average return of 21.9%, exceeding 2024’s return of 15.7% and the previous decade high of 18.3% recorded in 2020.
Global macro funds emerged as the top-performing strategy in 2025, generating a weighted average return of 27.7%. Equity strategies and multi-strategy funds also delivered strong results, with average returns of 23.4% and 22.7% respectively.
Larger hedge funds continued to outperform. Funds with more than $3 billion in assets under administration recorded a weighted average return of 26.5% for the year, compared with 16.8% in 2024.
After three consecutive years of net outflows since 2022, hedge funds attracted $62.2 billion of net inflows in 2025, surpassing inflows of $37.3 billion in 2021 and $17.8bn in 2020. Each quarter of the year recorded positive flows, with the third quarter standing out at $29.3 billion. Multi-strategy funds accounted for the majority of new capital with more than $50bn of net inflows.
Trading hit record levels as managers adjusted to new trade tariffs, rising stock markets and a late-year rally in precious metals, according to Citco. Treasury payment volumes also reached new peaks, with more than 700,000 payments processed across the calendar year.
Global hedge fund assets hit record $4.98 trillion in Q3
Declan Quilligan, head of hedge fund services at Citco Fund Services (Ireland) Limited, said: “2025 was the third consecutive year that hedge funds have not only delivered positive returns on an annual basis, but double-digit returns. Crucially, Citco’s clients turned the taps on in terms of flows in 2025, with the highest net inflows of the decade, reversing the outflows seen in the previous three years. Our clients also continued to outsource a wider range of functions to Citco, in particular middle office services, and in turn we will continue to invest in our proposition to support their needs and power their growth for decades to come.”
