Citco’s Q1 2025 report reveals hedge funds achieved a 2.8% return, marking the 10th consecutive quarter of positive returns. Multi-Strategy funds led with 4.7%, followed by Global Macro funds at 4.5%. Hedge funds saw net inflows of $7.1 billion and record trading volumes. Despite trade tariff impacts, funds continue delivering strong performance and investor confidence.
The Citco group of companies, a leading asset-servicer with $2 trillion in assets under administration (AUA), has reported a strong start to the year with hedge funds achieving consistent positive returns in the first quarter of 2025. Despite ongoing global trade tensions and market volatility caused by sweeping trade tariffs, hedge funds have managed to deliver their 10th consecutive quarter of positive returns.
Hedge funds administered by Citco posted an overall weighted average return of 2.8% in Q1 2025, maintaining a solid performance seen in the previous quarter. Notably, 62% of the funds reported positive returns, further solidifying the resilience of the hedge fund industry amidst challenging global market conditions. The record-breaking figures have been the strongest returns reported by Citco since the commencement of their quarterly reports, highlighting the ability of hedge funds to navigate turbulent economic times.
Top performing strategies
The Q1 2025 report reveals that Multi-Strategy funds led the pack with a strong return of 4.7%, outperforming other strategies. Global Macro funds followed closely with a return of 4.5%, showing their ability to thrive in a volatile market environment. Other strategies also performed well, with Equity and Commodities-focused funds delivering returns of 1.6%, while Fixed Income Arbitrage strategies showed a more modest return of 1.1%.
However, Event Driven strategies experienced negative returns in Q1, posting a weighted average return of -3.4%. Despite this, the larger funds with more than $3 billion in AUA stood out with the strongest performance, boasting a weighted average return of 4.6%, surpassing the returns seen by smaller funds.
Surge in inflows and record trading volumes
In a positive turn of events, hedge funds saw net inflows of $7.1 billion in Q1 2025, reversing the outflows experienced in the previous quarter. The inflows were driven by $46.9 billion in subscriptions, outpacing $39.8 billion in redemptions. Both January and February saw strong inflows of more than $4 billion, followed by a dip in March, which recorded a net outflow of $1.4 billion.
Multi-Strategy funds, in particular, attracted the most attention, experiencing net inflows of $3.5 billion in Q1. This trend marked a reversal from the outflows seen in the final quarter of 2024. The strong performance and increased interest in Multi-Strategy funds reflect investor confidence in this diversified approach.
The quarter also saw a significant surge in trading volumes, with Q1 2025 recording the highest volumes ever since Citco began its quarterly reports. This milestone was driven by increased activity in Equity and Equity Options, Index Futures, and Bank Debt, all of which reached new highs. The first quarter of 2025 surpassed the previous peak set in Q4 2024, indicating strong market participation and heightened investor interest.
Treasury payments and future outlook
Treasury payments in Q1 2025 totalled 163,971, marking a 16% increase compared to the same period last year. Although slightly lower than the record 164,971 payments seen in Q4 2024, Q1 2025 nonetheless started the year with strong momentum.
Declan Quilligan, Head of Hedge Fund Services at Citco Fund Services (Ireland) Limited, commented on the quarter’s performance:
“Hedge funds faced headwinds from tumbling markets in the first quarter of 2025 as investors reacted to a series of trade tariff announcements which have caused upheaval across the globe. Nonetheless, funds continued to deliver for investors with the 10th consecutive quarter of positive returns, and investors opted to increase their positions in hedge funds, with inflows to Multi-Strategy funds standing out at a strategy level, while trade volumes also spiked to record levels alongside surging treasury volumes.”
Looking ahead, Quilligan highlights the uncertainty in the market, with the trade tariff situation continuing to evolve. “The path ahead is very uncertain, with markets having to contend with near-daily developments around tariffs since the end of Q1, and we have seen the sell-off intensify at the start of the second quarter. If the situation escalates, investors may well look to hedge funds to offer diversification away from the worst of the turmoil”, he added.
Himani Verma is a seasoned content writer and SEO expert, with experience in digital media. She has held various senior writing positions at enterprises like CloudTDMS (Synthetic Data Factory), Barrownz Group, and ATZA. Himani has also been Editorial Writer at Hindustan Time, a leading Indian English language news platform. She excels in content creation, proofreading, and editing, ensuring that every piece is polished and impactful. Her expertise in crafting SEO-friendly content for multiple verticals of businesses, including technology, healthcare, finance, sports, innovation, and more.
