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Bailey McCann, Opalesque New York: Hedge fund performance turned negative in Q1 amid the sell-off in global markets sparked by conflict in the Middle East, but flows remained positive as investors continued to allocate to alternatives, according to the latest data from fund administrator Citco.
Funds had a weighted average return of -1.4% in Q1, bringing a 13-quarter winning streak for hedge funds to a close.
Event driven, multi-strategy and equity-focused funds were all in the red for
the quarter, with event driven funds seeing a weighted average return of -5%,
multi-strategy at -3.9%, and equities at -1.8%. All fund size categories also saw
declines.
"In the opening three-months of 2026, hedge funds had their first negative quarter since 2022, with many strategies impacted by swings in markets," said Declan Quilligan, Head of Hedge Fund Services, Citco Fund Services. "However, in some areas - specifically Global Macro and Commodities - returns were positive as the conflict in the Middle East impacted sentiment towards various asset classes differently."
Global macro funds were the top performers in Q1 with a weighted
average return of 8.5%, building on Q4's returns, while commodities
strategies came in at 7.1% against a backdrop of soaring commodity
prices. Fixed Income Arbitrage funds were also positive, at 0.1%.
On an assets under administration basis for the Citco universe of funds, all categories were negative. Funds
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