Hedge funds have shown impressive performance in Q2 2024, achieving their first net inflows since early 2022. With a weighted average return of 1.09% for the quarter and 7.62% year-to-date, investors are rediscovering confidence in hedge funds. Global Macro and Equity funds led the charge with strong returns, while hybrid funds attracted significant inflows.
Hedge funds have made a remarkable comeback in Q2 2024, marking their first quarterly net inflows since early 2022. This positive trend is driven by strong performances from Equity and Global Macro funds, which have contributed to a streak of seven consecutive quarters of gains. The quarter also saw a notable uptick in net inflows, with $4.7 billion in the market, instructing renewed investor confidence.
The Citco group of companies (Citco), a leading asset servicer with over $2 trillion in assets under administration (AUA), played an important role in this positive development. Their funds delivered a weighted average return of 1.09% in Q2, bringing the year-to-date (YTD) average return to 7.62%. The performance of various fund categories, including Global Macro and Equity funds, contributed to a broad-based recovery in the hedge fund sector.
“Hedge funds administered by Citco continue to deliver positive performance overall, but the main takeaway in the second quarter was the return to net inflows. Funds enjoyed a prolonged period of net inflows before 2022, and we have now seen a return to that environment as investors look for options amid an expected switch in economic policy later this year,” said Declan Quilligan, Head of Hedge Fund Services, Citco Fund Services (Ireland) Limited.
Positive performance and net inflows
In Q2 2024, hedge funds achieved their first quarterly net inflows since early 2022, marking a significant turnaround. Total net inflows reached $4.7 billion, driven by $50.3 billion in subscriptions compared to $45.6 billion in redemptions. Notably, April and May saw substantial inflows of $6.6 billion and $7.1 billion respectively, outweighing June’s redemptions of $8.9 billion.
Among the winning strategies, Hybrids stood out with consistent net inflows throughout the quarter, totalling $6.5 billion. Multi-Strategy funds also reported $1.3 billion in net inflows despite a surge in outflows in June. Fund of Funds and fixed-income arbitrage strategies followed, with net inflows of $1 billion and $0.5 billion, respectively.
Fund performance highlights
Equity and Global Macro funds delivered exceptional returns in Q2, with weighted averages of 2.25% and 2.26%, respectively. These performances have lifted their YTD returns to 10.86% and 7.45%. Other fund categories, including Commodity, Fixed Income Arbitrage, and Multi-Strategy funds, also recorded positive returns, contributing to a strong overall performance.
In terms of assets under administration, funds with $1 billion to $3 billion AUA emerged as the top performers with a weighted average return of 1.49%. Funds with $550 million to $1 billion AUA followed at 1.39%, while those with more than $3 billion AUA achieved 1.11%. The largest funds continued to lead with a YTD return of 8.18%.
About the Citco group of companies
The Citco group of companies (Citco) is a network of independent firms providing asset-servicing solutions to the global alternative investment industry. With operations in 36 countries and $2 trillion in assets under administration, Citco has been a trusted partner for over 40 years. Their services include middle and back-office functions such as daily NAV calculations, treasury handling, investor services, and regulatory reporting.
Citco is known for its strong culture of innovation and client-driven solutions, having served its clients for more than four decades. The company has grown organically to become one of the largest asset servicers in the industry, investing heavily in technology and developing client-friendly solutions. This ongoing commitment to excellence and innovation positions Citco as a trusted partner for asset managers worldwide.
