Hedge funds delivered another month of positive performance in May, extending their recovery from the first-quarter market sell-off, while investor appetite remained strong with the industry recording a fifth consecutive month of net inflows, according to the latest data from Citco.
Citco’s analysis shows that hedge funds generated a weighted average return of 3.6% during May, lifting year-to-date performance to 7.9%.
Global macro managers led performance for the second consecutive month, posting a weighted average return of 5.3%, closely followed by Equity strategies, which returned 4.8%. Event Driven funds also enjoyed a strong month with gains of 4.7%.
Multi-strategy funds generated a 2.7% return, while Fixed Income Arbitrage managers posted a more modest gain of 0.8%. Commodities strategies were the only major category to finish the month in negative territory, declining 2.6%.
Larger managers continued to outperform their smaller peers. Funds with more than $3bn in assets under administration produced an average return of 4.7%, compared with 2.5% for funds managing between $1bn and $3bn. Returns declined progressively across smaller size categories, with funds below $200m delivering an average gain of 0.6%.
Although performance remained broadly positive, the proportion of funds generating gains fell from April’s exceptionally strong level. Around 69.3% of managers finished May in positive territory, compared with 90% the previous month, while the gap between the strongest and weakest performers narrowed from 11.2% to 7.7%.
Investor allocations also remained supportive, with hedge funds attracting net inflows of $9.2bn during May. Gross subscriptions totalled $22.5bn, comfortably exceeding redemption activity and surpassing the level recorded in April. Total industry net inflows have now reached $53.8bn so far this year.
Multi-strategy funds continued to dominate fundraising, attracting $6.3bn of net new capital during the month and $32.2bn year to date, reinforcing their position as investors’ preferred strategy.
Equity funds also recorded healthy demand, taking in $2.1bn of net inflows, while Fund of Funds and Hybrid strategies each attracted approximately $900 million. Global Macro was the only major strategy to experience notable net outflows, with investors withdrawing $900 million despite the sector’s strong performance.
The largest managers remained the principal beneficiaries of investor allocations. Funds managing more than $10bn attracted $7.7bn of net inflows in May, taking year-to-date inflows to $42.1bn. Funds in the $5bn to $10bn category also remained in positive territory, while smaller managers recorded more modest inflows.
Regionally, Europe continued to lead fundraising, attracting $4.9bn of net inflows during May. Managers in the Americas gathered $3.2bn, while Asia-focused funds received $1.1bn. European managers have now accounted for almost 60% of all hedge fund net inflows recorded so far in 2026, underlining sustained investor confidence in the region.
