Hedge funds posted a 5.2% return in Q3, led by global macro strategies, as all major strategy types finished the quarter in positive territory, putting the industry on course for its strongest calendar year since 2020, according to Citco.

Data from the fund services specialist reveals that funds administered by the group achieved a weighted average Q3 return of 5.2%, with 80% of funds seeing gains. This brings year-to-date performance to 16.6%, with a strong Q4 potentially surpassing the 18.3% annual return recorded in 2020.

Global macro funds led Q3 performance with a 6.5% return, followed closely by equity strategies at 5.6% and multi-strategy funds at 4.8%. Year-to-date, multi-strategy funds have returned 19.3%, with equities at 17.1% and global macro at 15.8%. Larger funds saw the highest returns, with those managing $1bn-$3bn and over $3bn AUA both returning 5.5%.

Net inflows remained strong, with hedge funds receiving $23.5bn in Q3, led by multi-strategy subscriptions of $60.1bn against $36.5bn in redemptions. Combined with earlier inflows, total net inflows YTD stand at $41.3bn.

The quarter also saw record trading activity across multiple asset classes, as well as a milestone in treasury payment volumes.

“Hedge funds are very much back in vogue, and this latest quarter of positive performance cements their return to the mainstream," said Declan Quilligan, Head of Hedge Fund Services, Citco Fund Services (Ireland) Limited.“Reaching 12 consecutive quarters of positive returns is a milestone in itself and while we will no doubt see more twists and turns over the final few months of the year, 2025 could well be a banner year for hedge funds.

“Investors are taking advantage of this consistent run of performance, with inflows every month in Q3, as the combination of diversification and returns continues to prove enticing.”