Global fund administrator Citco shares its latest Monthly Hedge Fund Report for March 2026, offering a snapshot of how hedge funds navigated a more volatile market backdrop at the end of Q1.
At a high level, the March data shows:
- Net inflows of $4.4bn, with subscriptions of $28.3bn comfortably ahead of redemptions of $24.0bn, showing investor appetite remained positive despite tougher market conditions.
- Hedge funds posting their first negative month in almost a year, with a weighted average return of -3.5% in March and almost three quarters of funds in the red.
- Commodities and Global Macro proving the most resilient strategies, delivering weighted average returns of 3.3% and 1.1% respectively.
- Equity and Multi-Strategy funds facing the sharpest pressure, with weighted average returns of -2.8% and -6.3%.
- Europe again leading regional flows, attracting $5.6bn of net inflows in March, while the Americas saw net outflows of $1.4bn and Asia was broadly flat at $0.1bn.
- The largest funds continuing to capture the bulk of capital, with funds over $10bn in AUA drawing $5.1bn of net inflows.
- Dispersion remaining elevated, with the spread between the best and worst performing funds rising to more than 10% in March.
Beyond performance and flows, the operational data may also be of interest:
- Citco processed 70,094 treasury payments in March, up almost 25% month-on-month and marking the second highest tally on record.
- Trading activity remained elevated and broadly stable through the month, with daily average executed volumes still running above much of 2025.
- Trade ingestion STP rates stayed strong at 97.6%, underlining the resilience and scalability of activity across the platform.
Executive Summary
Performance
Hedge funds had their first negative month in almost a year in March as conflict in the Middle East rattled markets and impacted sentiment.
The weighted average return across the $1.3trn of hedge fund assets administered by the Citco group of companies (Citco) came in at -3.5%, with almost three quarters of funds in the red for the month.
With some major equity indices seeing one of their worst March performances in recent years, bond indices also declining, and even perceived safe havens like gold tumbling, hedge funds were caught up in the turmoil.
Equity and Multi-Strategy portfolios saw the heaviest declines, with weighted average returns of -2.8% and -6.3% respectively. Fixed Income Arbitrage and Event Driven hedge funds were also in negative territory, at -0.9% and -0.5%.
However, some strategies had positive months, with a 3.3% weighted average return for Commodities funds and 1.1% for Global Macro strategies.
On an Assets under Administration (AUA) basis, all categories experienced negative performance in March. The largest funds with more than $3bn of AUA had a weighted average return of -4.1%, followed by the smallest funds with less than $200m of AUA, at -2.9%. All other categories saw performance declines of more than 2%.
Once again, the spread between the best and worst performing funds was higher than it has been for much of the last 12 months, rising to over 10%.
Capital flows
The return of volatility in markets did little to deter hedge fund investors in March, with net inflows once again, although these were concentrated in a few strategies.
Net inflows totalled $4.4bn, driven by subscriptions of $28.3bn which were well ahead of redemptions, with Hybrid and Fund of Funds strategies seeing net inflows of $6bn and $2.6bn respectively.
Other strategies saw outflows in March; Equities had the highest net outflows, at $1.7bn, followed by Emerging Markets at $0.7bn, while Multi-Strategy funds – which have attracted the most inflows year-to-date – also saw their first monthly outflows this year, at $0.5bn.
On an AUA basis, the largest funds continued to attract inflows in March. Funds with more than $10bn had net inflows of $5.1bn, followed by the $5bn-$10bn category, at $1.3bn. Smaller funds saw net outflows, with the $1bn-$5bn and sub $1bn categories seeing net outflows of $1.6bn and $0.4bn.
Regionally, Europe continued to see net inflows to round out a positive quarter, with net inflows of $5.6bn, while funds in the Americas had net outflows of $1.4bn, and Asia was flat at $0.1bn.
Strategic partnership models – are your operations optimised for the future?
The operational landscape for hedge funds is currently defined by technological integration, enhanced risk management and compliance frameworks, as operational efficiency and robust infrastructure become key differentiators in a competitive market.
Changes to internal shadow footprints, and a shift from traditional ‘full shadow’ models toward more sophisticated oversight frameworks, are now being seen more frequently, and two transformative partnership approaches have emerged at the forefront of fund operations: strategic staff augmentation and technology co-sourcing solutions.
Citco has embarked on operating model re-design and workflow optimization programs with interested clients in recent years, as part of our 360-degree hedge fund solutions approach.
Performance
Overview of Investor Flows
Insights into Trade Volumes
Amid global turmoil caused by conflict in the Middle East and an increase in market volatility, trading activity in March remained elevated but broadly stable. Daily average executed trade volumes continued to run at higher levels than much of 2025, with increased participation from larger platforms and high frequency trading strategies – something which has been a key feature so far in 2026 – while activity across other client segments also increased in March.
Across the majority of Citco’s client base, trading patterns were consistent with recent months. Volumes across core asset classes, including equities, equity swaps and index linked products, remained higher than most of the prior year, with no material shifts in the overall mix of products traded.
Citco’s platform continued to perform throughout March, with trade ingestion Straight Through Processing rates remaining strong at 97.6%, underscoring the resilience and scalability of the operating model even as volumes stayed high.
Insights into Payments, Treasury and Collateral
Treasury payment volumes jumped almost 25% month-on-month in March, marking their second highest tally on record.
With the Middle East conflict impacting markets and sentiment, treasury payments came in at 70,094 in March, sharply higher than the 56,783 payments in February.
Hegde fund managers’ use of middle office is changing as alternatives markets continue to develop, and the latest statistics once again show the trend of outsourced middle office continues to gain traction, offering in-house teams access to the latest technology and processes to help streamline operations.
