Hedge funds saw their strongest year in a decade in 2025, with average returns exceeding 20% and nearly 90% of funds in positive territory, according to data from alternative asset servicing solutions specialist Citco Fund Services.
The surge in performance was accompanied by the first annual net inflows since 2021, marking a notable rebound for the industry after three consecutive years of outflows.
Funds administered by Citco recorded a weighted average return of 21.9%, surpassing last year’s 15.7% and topping the previous peak of 18.3% in 2020. Global Macro strategies led the pack with a 27.7% return, while Equity and Multi-Strategy funds delivered 23.4% and 22.7%, respectively. Large funds with assets over $3bn performed particularly well, returning 26.5% for the year.
Net inflows reached $62.2bn in 2025, exceeding 2021’s $37.3bn and 2020’s $17.8bn. Each quarter saw positive flows, with the third quarter standing out at $29.3bn. Multi-strategy funds were the most popular, accounting for more than $50 billion of net inflows.
Trade volumes also hit record highs, reflecting active management across equities, macro markets, and a late-year surge in precious metals. Treasury payment volumes reached new peaks as well, with over 700,000 payments processed across the year.
Declan Quilligan, Head of Hedge Fund Services at Citco, said: “2025 was the third consecutive year that hedge funds delivered positive, double-digit returns. Crucially, clients turned the taps on in terms of flows, reversing the outflows of the previous three years. We will continue to invest in our proposition to support fund managers’ growth for decades to come.”
