Citco’s October 2024 hedge fund report highlights a resilient 10.6% YTD return despite a challenging month with a 0.4% dip. Key trends include record treasury payment volumes, mixed strategy performances, robust investor inflows, and notable regional capital shifts. The report underscores continued growth and adaptability in the global hedge fund landscape.
The Citco Group has released its October 2024 hedge fund performance report, shedding light on key trends, strategy-specific outcomes, capital flows, and investor activity. While October marked a challenging month, with a slight decline in overall performance, the year-to-date (YTD) weighted average return remains strong at 10.6%. This report highlights the resilience of Citco-administered funds and the varied strategies employed by fund managers globally.
October set a new record in treasury payment volumes, with 55,161 transactions surpassing the previous high of 52,650 in July 2024. This figure represents a 21% year-over-year increase and underscores the growing trend among fund managers to outsource treasury operations. With December historically being the busiest month for treasury activity, Q4 is poised to set new records in transaction volumes.
Monthly performance review
October saw a marginal dip in hedge fund returns, with an overall weighted average return of -0.4%. This marks only the second month of negative performance in 2024, following several months of consistent gains. Performance across strategies was mixed:
- Global macro strategies: Emerged as the top-performing category, achieving a weighted average return of 1%. These funds capitalised on macroeconomic trends and policy shifts to deliver strong results.
- Fixed income arbitrage: Secured a 0.7% return, benefiting from interest rate differentials and market inefficiencies.
- Equity strategies: Continued their positive streak, recording a 0.4% return for October. Equity funds have now maintained six consecutive months of gains, with the last negative month being April 2024.
- Commodities funds: Faced significant headwinds, ending the month with a weighted average return of -2.5%, making them the weakest performers.
- Multi-strategy funds: Recorded a return of -1.3%, reflecting varied performance across their diversified investments.
- Event-driven funds: Closed the month at -0.6%, impacted by subdued corporate activity.
Despite the October downturn, 51% of funds delivered positive returns, though this was a sharp drop from 74.3% in September. The disparity in fund performance widened notably, with the spread between the 90th and 10th percentile fund returns increasing to 8.2%.
Capital flow dynamics
Investor interest remained robust, as hedge funds recorded net inflows of $0.9 billion for the month. Subscriptions outpaced redemptions, with $11.4 billion in subscriptions compared to $10.5 billion in redemptions.
Performance by fund size
- Mid-Sized Funds ($200M-$500M and $500M-$1B): Outperformed other categories, each recording a weighted average return of -0.2%. Their size allowed for greater flexibility in adapting to market conditions.
- Large Funds (>$10B): Experienced challenges, with net outflows of $1.4 billion and a weighted average return of -0.4%.
- Small Funds (<$200M): Underperformed significantly, delivering a weighted average return of -0.7%.
Regional capital movements
- Americas: Led with net inflows of $1.1 billion, reversing the outflows seen at the end of Q3.
- Europe: Followed with positive net inflows of $0.3 billion.
- Asia: Recorded net outflows of $0.5 billion, highlighting regional disparities in investor sentiment.
Year-to-date performance highlights
The October decline does not overshadow the strong performance seen throughout 2024. Key YTD metrics include:
- An overall weighted average return of 10.6%, bolstered by strong performances in previous months.
- Net inflows of $2.8 billion YTD, reflecting sustained investor confidence.
- Positive quarterly returns for eight consecutive quarters as of Q3 2024.
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