New data from the Citco group of companies (Citco), the leading asset-servicer with $2 trillion in assets under administration (AUA), reports that hedge fund strategies have delivered their highest returns since 2020, with a weighted average return of 15.7% last year.
Highlights:
- Majority of strategies see gains, with more than 80% of all funds seeing positive returns.
- Equities were once again the top performing strategy group, with a weighted average return of 20.2%. This was followed by Global Macro funds (19.5%) and Multi-Strategy funds, which also achieved double-digit returns (13.3%).
- Event Driven funds were next at 8.4%, while Fixed Income Arbitrage strategies came in at 7.3%.
- Trade volumes broke records throughout 2024, with every month seeing significantly higher daily activity versus the same period the previous year.
- Treasury payment volumes across the hedge fund client base also surged in 2024, with growth rates at their highest level since 2021.
- Amongst its clients, Citco is seeing a focus on transformation and an increasing usage of AI.
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Executive Summary
Hedge funds delivered their highest annual return since the start of the decade in 2024, with more than 80% of funds seeing positive returns.
Funds administered by the Citco group of companies (Citco) achieved a weighted average return of 15.7%, driven by Equity and Global Macro strategies which delivered the highest returns.
Equities were once again the top performing strategy group, with a weighted average return of 20.2%, just ahead of Global Macro funds at 19.5%. Multi-Strategy funds also achieved double-digit returns, at 13.3% for the year.
There were small net outflows overall in 2024, with the majority coming in the final quarter. Overall, net outflows were around 75% lower than the previous year, with Multi-Strategy and Equity funds seeing the lion’s share of activity.
Meanwhile, trade volumes broke records throughout 2024, with every month seeing significantly higher daily activity versus the same period the previous year. While activity was high throughout the year, it spiked mid-summer as high-frequency trading strategies impacted volumes, and then stayed elevated throughout the second half.
Treasury payments saw their fastest growth since 2021 last year across hedge funds administered by Citco, setting a new peak above 600,000. The year saw numerous records tumble, with a new monthly high set in July amid expectations of an imminent cut to policy rates. July’s peak was then surpassed in October, and again in December when monthly volumes came in just below 60,000, the highest since Citco started reporting on volumes in December 2019.
Against a backdrop of strong equity market returns powered by the ongoing bull run in US equities, hedge funds once again delivered double-digit returns in 2024, while providing diversification to investors. As we begin 2025, new factors are at play, including a new President in the US, easing inflation, and positive growth expectations in major economies.
Amongst Citco’s clients we see a focus on transformation, an increasing usage of AI, and a desire to remove duplication and associated costs. Citco is actively supporting these transformation initiatives and assisting our clients in overcoming challenges and grasping opportunities as these trends unfold.
Overview of Data
Performance Data
We have considered funds for which Citco delivers daily PNL/NAV reporting. We only include returns for those strategies where we believe Citco has sufficient daily service delivery on that strategy.
Treasury
Data on payments volumes are constituted by all dispatched payments including Letter of Acceptances (LOAs). Excludes all payments to investors/limited partners.
Performance
Hedge funds delivered their highest annual return for four years in 2024, with a weighted average return of 15.7% overall.
Equity and Global Macro strategies drove returns in 2024, with Equity funds once again the top performing strategy group overall after achieving a weighted average return of 20.2%. This was marginally lower than 2023’s return of 21.9%.
Global Macro strategies were just behind with a weighted average return of 19.5% for the year, well ahead of the 0.8% seen in 2023, while Multi-Strategy funds also achieved double-digit returns in 2024, at 13.3% for the year, marginally ahead of last year’s figure of 12.6%.
Equity funds were the top performing strategy for a second year in a row, with a weighted average return of 20.2%
Event Driven funds were next at 8.4%, while Fixed Income Arbitrage strategies came in at 7.3%. Only Commodities funds were negative, with a weighted average return of -1.3%, making it two consecutive years of negative returns.
On an assets under administration (AUA) basis it was another positive year for all categories. The largest funds with more than $3B of AUA had the highest weighted average return, at 16.8% for the year, closely followed by the $1B-$3B of AUA grouping at 16.6%. Continuing in descending order of fund size, the $500M-$1B of AUA category had a weighted average return of 12.8%, followed by funds with between $200M-$500M of AUA, at 10.9%, and the sub $200M category at 6.6%.
In total, 82% of funds achieved a positive annual return in 2024, up marginally from 2023’s tally of 80%. Meanwhile, the divergence between the best and worst performing funds was similar to last year, with the rate of return spread between the top and bottom 10% of funds coming in at 37.9%, just above the 36.8% seen in 2023.
Read the full report here.
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.
