Hedge funds experienced a “small decline” in performance in August, recording their first negative month of 2023 with an overall weighted average return of -0.8%, according to data.
The rate of return spread widened to 7.3% from 6.7% in July, indicating a small increase in volatility, reported the monthly hedge fund update for August 2023 by the Citco group of companies (Citco).
A negative return caused the year-to-date average return for Citco’s administered funds to decrease to 8.8% from July’s 9.6%.
Top performers at a strategy level were global macro funds (0.8% weighted average return), fixed income arbitrage funds (0.7% weighted average return) and event-driven funds (0.5% weighted average return).
Investor flows switched back to positive in August, driven by a steep drop in redemptions, said Citco. Subscriptions of $6 billion exceeded redemptions of $5.2 billion overall, leading to net inflows of $800 million.
Equity funds had their first monthly drop of 2023 with an average return of -1%. Multi-Strategy funds also had a -1% return. Commodities went from gains to losses, with a -1.9% average return, making them the worst performers in August.
Regarding assets under administration, funds over $3 billion had the “worst” performance at -1%. The $1 billion – $3 billion category followed with a -0.7% average return.
Hybrid funds led the activity for the month, attracting $2.2 billion in subscriptions – “significantly higher” than the $400 million in redemptions – resulting in net inflows of $1.8 billion. Fund of funds had net inflows of $200 million, followed by arbitrage and global macro funds, each with $100 million.
For the second consecutive month, Europe experienced more people subscribing to funds than redeeming, resulting in net inflows of $1.8 billion for funds based in the region.
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