Citco’s latest Hedge Fund Report, which tracks the performance and capital flows across strategies and regions in July, reveals that after a strong first half of the year, hedge fund performance dipped marginally, with 55.9% of funds in the green. Hedge Funds administrated by Citco have achieved an overall weighted average return of 0.5% for the month, continuing the positive momentum seen in the first half of the year.
Key July highlights include:
- Event Driven funds were the top performer in July, with a weighted average return of 2.7%.
- Over half of funds were in positive territory (55.9%)
- Fixed Income Arbitrage and Global Macro also stood out performance wise, with a weighted average return of 1.4% and 1.3% respectively.
- On an Assets under Administration (AUA) basis, most fund size categories posted positive returns in July, with the exception of those managing between $200–$500 million, which saw a slight decline of -0.1%.
- Commodity funds underperformed the most at -1.7%.
- Equites saw muted returns at 0.6%.
- There was $16.4bn of subscriptions and $6.1bn of redemptions, resulting in net inflows of $10.3bn.
- Regional capital flow: Funds in Europe ($5.1bn), Americas ($4.8bn) and Asia ($0.4bn) all saw positive net inflows.
Executive Summary
Performance
Hedge fund performance dipped in July after a strong first-half of the year, with the overall weighted average return for funds administered by the Citco group of companies (Citco) at 0.5% and with 55.9% of funds in the green.
Event Driven funds were the top performer in July, with a weighted average return of 2.7%. Fixed Income Arbitrage and Global Macro also stood out performance wise, with a weighted average return of 1.4% and 1.3% respectively. Meanwhile, Equities saw more muted returns at 0.6%.
In contrast to June’s performance of achieving a weighted average return of 1.9%, Multi-Strategy funds were relatively flat at 0.1%. The only strategy in negative territory for the month was Commodities at -1.7%.
On an Assets under Administration (AUA) basis, the majority of AUA buckets were positive, with only funds between $200-500m experiencing a negative weighted return at -0.1%.
Funds with between $1bn-$3bn of AUA had a weighted average return of 1.1% to top the board for the second consecutive month, while funds with more than $3bn of AUA came second at 0.4%. Funds with sub $200m delivered at 0.2%, whilst $500m-$1bn of AUA were flat.
The rate of return spread fell to 6.4%, down from 7.3% in June – and down from last year’s July performance of 7.7%.
Capital Flows
Hedge funds continued to see a wave of activity in July, with the majority of the strategies seeing net inflows. Overall, there was $16.4bn of subscriptions and $6.1bn of redemptions, resulting in net inflow of $10.3bn – with year-to-date (YTD) flows remaining positive – standing at $29.7bn. Multi-Strategy funds took further net inflows in July at $8.9bn, taking their YTD tally to $25.3bn of net inflows – ahead of all other strategy types.
Emerging Markets saw net outflows of $0.1bn, with most other strategies showing minimal net inflows; Arbitrage and Global Macro all saw net inflows of $0.1bn, while Fund of Funds had net inflows of $0.5bn, and Equities had net inflows of $0.3bn.
On an AUA basis, the current trend of inflows into larger funds continued, as funds with more than $10bn+ of AUA had net inflows of $6.9bn in July, taking them to $27.7bn of net inflows YTD.
All other categories saw much lower net flows; funds with between $1bn-$5bn of AUA saw net outflows of $1.9bn, followed by funds with $5bn-$10bn which had net outflows of $1.1bn, and the smallest funds with under $1bn at $0.5bn.
Funds in Europe saw the highest net inflow in July, coming in at $5.1bn, followed by the Americas at $4.8bn. Meanwhile, funds in Asia had net inflows of $0.4bn.
Citco And Alternative Funds Insight Podcast Hedge Funds’ Rise In Private Wealth Portfolios
In a special Alternative Funds Insight podcast episode, Declan Quilligan discusses hedge funds' impressive performance over the last quarter and growing appeal. Despite unprecedented market volatility, hedge funds have recorded their 11th consecutive quarter of positive returns, outperforming market indexes. This consistent performance is attracting investors, particularly private wealth portfolios.
The podcast highlights how hedge funds, once seen as suitable only for institutional investors, are now recognized as valuable portfolio diversifiers. Their resilience in turbulent markets, flexibility in investment strategies, and ability to navigate volatility make them increasingly attractive to a broader investor base.
Private wealth, including family offices and high-net-worth individuals, is emerging as a fertile source of new investments for hedge funds. The growing demand for uncorrelated returns positions hedge funds to play a larger role in private wealth portfolios.
In the podcast, Quilligan emphasizes hedge funds' adaptability to different mandates and their toolkit for navigating volatile times. This flexibility, combined with their potential for higher returns, makes them well-positioned to capture more private wealth investments as the demand for alternative investment options continues to grow.
To listen in to the episode, click here.
Performance
Overview of Investor Flows
Read the full report here by Citco
