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In the week ending December 30th 2022, a study by Preqin revealed that hedge funds AUM stands at $4.1tn as of September 2022, which represents a 4.8% reduction since the end of 2021. As of September, the asset class had declined by 9.3% (-12.2% annualized). The decline was not slight, but a deep dive into sub-strategies will help us understand how the industry truly performed.

Meanwhile a Reuters report said that global hedge funds are set to register their worst returns in 14 years in 2022 after aggressive U.S. interest rate rises hit asset prices hard, however, their declines are overall smaller than the slump seen in equity and bond markets this year. Some hedge fund strategies that put money in commodities and currencies using macro-focused strategies and exploited price differences between related securities outperformed in 2022, handing decent gains to investors.

However, hedge funds trading bonds and currencies are on track for their best year since the global financial crisis, boosted by the steep interest rate rises that have inflicted heavy losses on equity specialists and mainstream investors. So-called macro hedge funds, made famous by the likes of George Soros and Louis Bacon, endured a barren period when markets were becalmed by trillions of dollars of central bank bond buying after 2008.

Inflationary pressures, geopolitical tensions ......................

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