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Bailey McCann, Opalesque New York: Hedge funds saw their first annual net inflows since 2021 and delivered their best performance of the decade so far in 2025, with the average fund returning more than 20% to investors and almost 90% of funds in the green for the year, according to the latest data from fund administrator Citco.
This was the third consecutive year that hedge funds have not only delivered
positive returns on an annual basis, but double-digit returns, against a backdrop
of climbing equity markets and broadly consistent volatility - barring the spike seen
in April.
Global Macro funds were the top performing strategies in 2025, with a weighted
average return of 27.7%. Equity and multi-strategy funds also saw performance
above the 20% mark last year, at 23.4% and 22.7% respectively.
Fixed income arbitrage strategies also enjoyed double-digit returns in 2025,
at 11.1%, while event driven strategies came in at 3.5%, and commodities
at 2.1%.
The divergence between the best and worst performing funds also
fell versus the previous year, with the rate of return spread between the top
and bottom 10% of funds coming in at 33.2%, down from 37.9%.
Crucially, investors turned the taps on in terms of flows in 2025, with the
highest net inflows of the decade, reversing the outflows seen in the previous
three years.
Hedge funds saw net inflows of $62.2 billion in 2025. In 2025, each quarter of the year saw positive flows, with Q3
the standout with $29.3b...................... To view our full article Click here
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