Hedge funds saw their first negative month of the year in April, data shows

In April, hedge funds experienced their first negative month of 2024, with nearly all strategy types seeing declines. Despite this setback, hedge funds maintain a positive outlook for the year, with a year-to-date (YTD) return of 6.5%, data has shown.

According to the Citco group of companies, the overall weighted average return fell to -0.7%, a drop from March’s 2.2%. The hardest-hit strategy was event driven funds, which reported a weighted average return of -2.1%. Equities followed with a -1.3% return, and global macro strategies recorded a -1% decline. Other strategies, including fixed income arbitrage and multi-strategy funds, experienced smaller losses of -0.3%. In contrast, commodities strategies were the standout performer, achieving a 2.1% return, marking their best month in 2024 and maintaining consistent positive performance throughout the year.

Hedge funds told to strengthen liquidity management

Asset size also played a role in performance, with the largest funds (over $3 billion in assets under administration, AUA) showing a weighted average return of -1%. Smaller funds with less than $200 million of AUA saw returns of -0.9%, while mid-sized funds ($200 million to $500 million AUA) posted -0.8%. Interestingly, funds in the $500 million to $1 billion AUA category were the only group to see positive returns in April, at 0.1%.

Q4 2023 sees lowest hedge fund launches since Q3 2022

Capital flows turned positive for hedge funds in April, with net inflows of $5.7 billion, marking the highest net inflows of the year. Subscriptions totalled $11.8 billion, outpacing redemptions of $6.2 billion. This shift brought YTD net inflows to $2.6 billion. Multi-strategy funds led the way with $2 billion in net inflows, followed by Fund of Funds at $1.1 billion and Hybrid funds at $0.9 billion. Only event driven funds saw net outflows, though these were modest at $0.1 billion.

On a regional basis, the Americas experienced the highest net inflows at $4.2 billion, with Europe and Asia also returning to positive territory with $0.9 billion and $0.6 billion, respectively. Looking ahead, while projections suggest potential outflows later in the quarter, these forecasts remain subject to change as market conditions evolve.

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