The latest data from the Citco group of companies’ (Citco) Hedge Fund Report for October 2025 shows that hedge funds started Q4 strongly, posting a weighted average return of 2.1%.
The recent Q3 2025 Hedge Fund Report stated hedge funds are on course for the best year of the decade in returns if Q4 delivers well – positive steps.
Performance was positive across every major strategy; however Global Macro funds led the charge with a return of 5.6%.
Highlights:
- Hedge funds returned 2.1% in October.
- Global Macro (5.6%) and Equity (2.6%) strategies led in gains, while Multi-Strategy (0.9%) continued steady performances.
- 65% of funds posted positive returns, with the largest managers ($3bn+ AUA) outperforming peers at 2.6%.
- Net inflows were extremely positive, at $10.6bn overall – one of the highest of 2025 – bringing YTD subscriptions to $56bn.
- Multi-Strategy funds dominated flows, attracting $9.4bn in October and >$45bn YTD.
- Regional inflows: the Americas ($9.6bn) and Europe ($0.8bn) and Asia ($0.1bn)
- The report also explores trends around outsourcing, including the shift away from ‘full shadow’.
Executive Summary
Performance
The final quarter of 2025 started strongly for hedge funds, with another 2%+ month in terms of performance as every strategy group saw positive returns.
The overall weighted average return for funds administered by the Citco group of companies (Citco) came in at 2.1%, with Global Macro funds leading the wider group for the third month running.
Global Macro funds achieved a weighted average return of 5.6% – with some strong outliers boosting the overall total – and were followed by Equity strategies at 2.6%, and Multi-Strategy funds at 0.9%.
Commodities strategies were next, with a weighted average return of 0.8%, and Fixed Income Arbitrage came in at 0.7%. Event Driven funds reversed some of their recent negative performance with a 0.4% weighted average return.
On an Assets under Administration (AUA) basis, the largest funds with more than $3bn of AUA continued to shine, with a weighted average return of 2.6%, followed by funds with between $1bn-$3bn of AUA, at 1.9%.
Returns for other categories were positive but more muted – funds with between $200m-$500m of AUA came in at 0.6%, followed by the $500m-$1bn of AUA category at 0.3%, while the smallest funds (with less than $200m of AUA) had a weighted average return of 0.1%.
In total, 65% of funds were in positive territory in October, while the spread between the best and worst funds was 7.2%, consistent with the previous month.
Capital Flows
Hedge funds enjoyed one of their highest net inflows of 2025 in October, with Multi-Strategy funds seeing significant interest.
Net inflows came in at $10.6bn overall, with subscriptions of $21.2bn significantly outweighing redemptions. It takes YTD subscriptions to $56bn.
Multi-Strategy funds took the vast majority of inflows, with net inflows of $9.4bn. YTD they have taken more than $45bn, far higher than any other strategy group.
While flows into other strategies were lower, the majority were positive in October. Hybrid strategies had net inflows of $0.8bn, followed by Fund of Funds at $0.4bn, and Arbitrage strategies at $0.3bn. Other strategies were more muted.
On an AUA basis, the largest funds accounted for the lion’s share of net inflows. Funds with more than $10bn of AUA had net inflows of $7.9bn, followed by the $1bn-$5bn AUA category at $1.7bn, and then funds with between $5bn-$10bn of AUA, at $0.9bn. Funds with less than $1bn of AUA had net inflows of $0.2bn.
Funds in the Americas more than reversed last month’s outflows after seeing net inflows of $9.6bn in October. Funds in Europe were next, with net inflows of $0.8bn, while funds in Asia came in at $0.1bn.
The Great Outsourcing Debate: Citco’s Vision For Next-generation Hedge Fund Operations
Peter Kane, Head of Hedge Fund Services – North America, Citco Fund Services (USA) Inc., spoke to Hedgeweek recently about how Citco is helping hedge fund clients address challenges and take advantage of opportunities around operations.
The industry is experiencing a fundamental shift away from ‘full shadow’ oversight models towards a more efficient shadow-light model, and in a wide-ranging Q&A this topic and others are discussed in detail.
To read the full interview please click here.
Performance
Overview of Investor Flows
Read the full report here by Citco
