Hedge funds recorded their strongest annual performance since 2020, with a weighted average return of 15.7% in 2024, according to asset servicer Citco. Over 80% of funds posted positive returns, with equities leading the way.
Equity strategies were the top performers, delivering a 20.2% return, followed closely by global macro funds at 19.5%. Multi-strategy funds also saw double-digit gains at 13.3%, while event driven and fixed income arbitrage strategies posted 8.4% and 7.3% returns, respectively. The only “laggard” was commodity strategies, which posted a -1.3% return, marking two consecutive years of losses.
Despite this performance, hedge funds saw net outflows of $10.6 billion in 2024, primarily from equity and multi-strategy funds. However, net outflows were 75% lower than in 2023, and most withdrawals occurred in the final quarter of the year.
The data also highlighted “record-breaking trade volumes” with every month in 2024 seeing higher daily activity than the previous year. Mid-summer saw a spike in trading, driven by high-frequency strategies, with high volumes continuing through the second half of the year.
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Treasury payment volumes across Citco’s hedge fund clients also surged to their highest levels since 2021. July set a new record, amid expectations of policy rate cuts, only to be surpassed in October and December, with monthly volumes nearing 60,000 transactions.
“The hedge fund industry demonstrated resilience in 2024, with strong returns across most strategies despite macroeconomic uncertainty,” Citco reported. The firm, which administers $1.3 trillion in hedge fund investments and over $1 trillion in private markets, also noted a growing industry focus on AI and operational transformation.
Declan Quilligan, head of hedge fund services, Citco Fund Services (Ireland) Limited, said: “Against a backdrop of strong equity market returns powered by the ongoing bull run in US equities, hedge funds once again delivered double-digit returns to investors in 2024, while providing diversification to investors. As we begin 2025, new factors are at play including a new President in the US, easing inflation, alongside positive growth expectations in major economies. Amongst Citco’s clients we see a focus on transformation, an increasing usage of AI, and a desire to remove duplication and associated costs.”
