Equity and global macro funds were among the winners as hedge funds maintained their winning streak in Q2, making it seven consecutive quarters of positive returns, while the quarter also saw a return to net inflows for the first time since early 2022, according to data from Citco.
Funds administered by the asset servicer delivered a weighted average return of 1.09% in Q2, to take the overall weighted average return year-to-date to 7.62%. Some 80% of funds have now achieved positive returns so far in 2024.
Global macro and equity funds stood out in the second quarter of the year, with weighted average returns of 2.26% and 2.25%, to take their YTD performance to 7.45% and 10.86% respectively. Commodity, fixed income arbitrage and multi-strategy funds were also positive in Q2, with weighted average returns of 1%, 0.53% and 0.09%. This took YTD returns for commodities to 3.66%, with fixed income arbitrage at 0.8% and multi-strategy at 5.93%.
All AUA categories also posted positive weighted average returns in Q2, bar the smallest funds, which dipped into negative territory. Funds with between $1bn-$3bn of AUA were the top performers at 1.49%, followed by funds with between $550m-$1bn of AUA at 1.39%. Next were funds with more than $3bn of AUA, at 1.11%, while funds with between $200m-$500m of AUA were just positive at 0.09%. On a YTD basis, the largest funds remain in top spot, with a weighted average return of 8.18%, followed by the $1bn-$3bn category at 8.07%, and the $500m-$1bn grouping at 6.54%. The $200m-$500m grouping was next at 4.99%.
In Q2, hedge funds saw their first quarterly net inflows since the start of 2022, with inflows in April and May outweighing June’s redemptions. In total, hedge funds had net inflows of $4.7bn in Q2, with subscriptions of $50.3bn outweighing redemptions of $45.6bn. This was driven by net inflows of $6.6bn and $7.1bn in April and May respectively, which more than countered June’s redemptions of $8.9bn.
Inflows were seen into a number of strategies, with hybrids continuing to be popular, having already seen net inflows of $1.1bn in Q1. Multi-strategy funds had net inflows of $1.3bn in Q2 despite a jump in outflows in June, while fund of funds were next at $1bn, followed by fixed income arbitrage strategies at $0.5bn.
Treasury volumes set another record in Q2, closing in on the 150,000 mark after three of the busiest months of record. Treasury payment volumes climbed to 147,267 overall in the second quarter, up 4% quarter-on-quarter.
In a statement, Declan Quilligan, Head of Hedge Fund Services at Citco Fund Services (Ireland), said: “Hedge funds administered by Citco continue to deliver positive performance overall, but the main takeaway in the second quarter was the return to net inflows.
“Funds enjoyed a prolonged period of net inflows prior to 2022, and we have now seen a return to that environment as investors look for options amid an expected switch in economic policy later this year.
“Whatever materialises on that front, there remain lots of opportunities for investors across the broad spread of offerings in the hedge fund market.”
