New data from the Citco group of companies (Citco), the leading asset-servicer with $2 trillion in assets under administration (AUA), delivered a weighted average return of 1.09% in Q2, to take the overall weighted average return year-to-date (YTD) to 7.62% . Some 80% of hedge funds have now achieved positive returns so far in 2024.
Interestingly, the main takeaway in Q2 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.
Highlights:
- The top performers are Global Macro and Equity funds with weighted average returns of 2.26% and 2.25% (YTD 7.45% and 10.86% respectively)
- Positive performance across all AUA categories: funds with $1B-$3B of AUA performed best (1.49%)
- Hedge funds saw their first quarterly net inflows since the start of 2022, with inflows in April and May outweighing June’s redemptions; Net inflows of $4.7B in Q2
- Hybrid funds continue to be popular; $6.5B of net inflows in Q2
- Record trade volumes, driven by high frequency trading strategies
- Funds in the Americas were the only category to see net inflows in Q2 ($6.3B); small net outflows in Europe and Asia
New York/London, July 25, 2024: 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.
Funds administered by the Citco group of companies (Citco), the leading asset-servicer with over $2 trillion in assets under administration (AUA), delivered a weighted average return of 1.09% in Q2, to take the overall weighted average return year-to-date (YTD) to 7.62%. Some 80% of funds have now achieved positive returns so far in 2024.
Global Macro and Equity funds stood out in Q2, 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 $1B-$3B of AUA were the top performers at 1.49%, followed by funds with between $550M-$1B of AUA at 1.39%. Next were funds with more than $3B 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 $1B-$3B category at 8.07%, and the $500M-$1B 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 $4.7B in Q2, with subscriptions of $50.3B outweighing redemptions of $45.6B. This was driven by net inflows of $6.6B and $7.1B in April and May respectively, which more than countered June’s redemptions of $8.9B.
Inflows were seen into a number of strategies, with Hybrids the standout after seeing net inflows every month in Q2 to give them $6.5B of net inflows overall. Hybrids continue to be popular, having already seen net inflows of $1.1B in Q1. Multi-Strategy funds had net inflows of $1.3B in Q2 despite a jump in outflows in June, while Fund of Funds were next at $1B, followed by Fixed Income Arbitrage strategies at $0.5B.
The second quarter was also Citco’s busiest to date from a trade volumes perspective. The main drivers of this were high frequency trading strategies, which accounted for a large share of the total trades as managers reacted to changes in market volatility.
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.
Declan Quilligan, Head of Hedge Fund Services, Citco Fund Services (Ireland) Limited, 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 materializes on that front, there remain lots of opportunities for investors across the broad spread of offerings in the hedge fund market.”
About the Citco group of companies (Citco)
The Citco group of companies (Citco) is a network of independent companies worldwide. These companies are leading providers of asset-servicing solutions to the global alternative investment industry. With $2 trillion in assets under administration and operations spanning across 36 countries, Citco’s unique culture of innovation and client-driven solutions have provided Citco’s clients with a trusted partner for more than four decades.
