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Laxman Pai, Opalesque Asia: Preqin 2025 Global Report: Hedge Funds showed that hedge funds demonstrated value in investor portfolios as diversifiers and risk mitigators while offering returns in 2024.
Global equity and bond markets were relatively volatile in 2024 and within this context, hedge funds proved to be steady. Preqin's All Hedge Fund Index returned 10% in 2024 to Q3, or 14% at a compound annualized growth rate (CAGR).
Meanwhile, $25.5bn in hedge fund inflows in Q3 2024 resulted in $19.2bn in net subscriptions through the first nine months of the year. This single quarter, however, should for now be considered an outlier given net outflows have persisted for most of the last decade.
According to the report, assets under management (AUM) for hedge funds globally stood at $4.9tn by Q3 2024, an 8% increase from the $4.5tn at the start of the year. The 12% 12-month growth to Q3 2024 was notably above average historical figures. As an asset class, hedge funds have mostly seen net outflows over the long term, meaning performance was the key driver behind AUM growth.
Overall returns of 10% for 2024 to Q3 lagged global public equities at 19% (MSCI World Index), but outperformed public debt at 4% (Bloomberg Global Aggregate index). Within overall returns, each hedge fund strategy showed itself capable of mitigating - to varying degrees - the volatility experienced in equity and bond markets in 2024 when added to a larger public market portfolio.
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