Hedge Funds Shine in 2024 with 88% Reporting Positive Returns, but Q1 Outflows Loom

In 2024, hedge funds have largely continued their strong performance, with 88% of funds posting positive returns across various strategies, building on the solid gains of 2023, according to Citco's latest hedge fund report. Citco, a leading global alternative investment asset servicer with $1.8 trillion in assets, revealed that funds under its administration achieved a weighted average return of 1.4% in January 2024. Among the best performers were equity funds, which led with a return of 1.8%, closely followed by global macro funds at 1.6%.

Other strategies posted modest gains, with multi-strategy funds achieving a 1.2% return, fixed income arbitrage funds returning 1.1%, and commodities funds earning 0.8%. However, event-driven funds saw a decline, with a negative return of -2.3%, marking the only strategy to experience losses.

Despite the overall positive performance, equities strategies saw the largest outflows in January, with $0.7 billion withdrawn. Regionally, European funds led in net inflows, attracting $2.1 billion, while funds in the Americas saw inflows of $0.6 billion. In contrast, Asian funds experienced a modest outflow of $0.2 billion.

Citco projects that total net outflows for Q1 2024 will amount to $13.8 billion, indicating a potential shift in investor sentiment despite the overall positive performance across hedge funds.