Hedge funds see best returns since 2020

Hedge funds delivered their strongest annual performance since the start of the decade in 2024, posting a weighted average return of 15.7%, the highest since 2020’s 18.3%, according to new data from Citco. Equities led all strategy groups with a weighted average return of 20.2%, slightly ahead of Global Macro funds at 19.5%. Multi-Strategy funds also achieved double-digit gains, closing the year with a 13.3% return.

Event-Driven funds followed with an 8.4% return, while Fixed Income Arbitrage strategies posted 7.3%. The only sector to post losses was Commodity strategies, which recorded a -1.3% weighted average return, marking a second consecutive year of declines.

Citco, which administers $1.3 trillion in hedge fund investments and over $1 trillion in private market assets, also reported net outflows of $10.6 billion across hedge funds in 2024. These outflows were concentrated in Equity and Multi-Strategy funds, with most redemptions occurring in the final quarter. However, total outflows were approximately 75% lower than in the previous year.

Meanwhile, hedge fund trade volumes hit record highs throughout 2024, with daily activity significantly outpacing 2023 levels each month. Mid-summer saw a surge in trading, driven in part by high-frequency strategies, with volumes remaining elevated through year-end.

Treasury payment volumes among hedge fund clients also experienced their fastest growth since 2021, breaking multiple records. A new peak was set in July amid expectations of an imminent policy rate cut, only to be surpassed in October and again in December, when monthly treasury payments neared 60,000—the highest level since Citco began tracking these figures.