Hedge funds saw a decline in February, with a weighted average return of -0.3%, according to data from asset servicer Citco. Despite this dip, year-to-date (YTD) returns remained strong at 3.7%, and investor demand rose.
More than 55% of hedge funds administered by Citco delivered positive returns in February, with global macro funds leading the pack, posting a 2.2% weighted average return. Event-driven funds followed, albeit at a modest 0.2% return.
Other hedge fund strategies struggled, according to Citco’s data, with multi-strategy funds underperforming, recording a -0.7% weighted average return. Equity and commodity strategies also faced headwinds, contributing to the overall market decline.
Hedge funds start 2025 strong with 4% returns
In terms of fund size performance, mid-sized funds fared best. Those with assets under administration (AuA) between $500 million and $1 billion returned 0.3%, while those managing $1 billion to $3 billion returned 0.1%. Meanwhile, the largest funds, with over $3 billion in AuA, posted the weakest returns at -0.6%.
Despite the market downturn, investor confidence remained high, with net inflows reaching $3.1 billion. The Americas led the way with $2.7 billion in inflows, followed by Europe at $1.5 billion, while Asia saw net outflows of $1.2 billion.
The rate of return spread narrowed, as the difference between the 90th and 10th percentile fund returns shrank to 7.4%, down from 8.5% in January. Citco’s treasury payments also exceeded 50,000 transactions once again, with a 14% year-on-year increase, reaching 53,765 in February 2025.
