Hedge Funds Experience First Negative Month of 2024, Maintain Positive Outlook

Hedge funds experienced their first negative month of 2024 in April, with nearly all strategy types seeing declines, according to data from the Citco group of companies. Despite this setback, hedge funds maintain a positive outlook for the year, with a year-to-date return of 6.5%.

The overall weighted average return for hedge funds fell to -0.7% in April, a significant drop from March’s 2.2%. Event driven funds were the hardest-hit strategy, reporting a weighted average return of -2.1%. Equities and global macro strategies also saw declines of -1.3% and -1%, respectively. However, commodities strategies stood out as the top performer, achieving a 2.1% return, their best month in 2024.

Asset size also played a role in performance, with the largest funds (over $3 billion in assets under administration) 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 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%.

Capital flows for hedge funds turned positive in April, with net inflows of $5.7 billion, the highest of the year. Multi-strategy funds led the way with $2 billion in net inflows, followed by Fund of Funds and Hybrid funds. Only event driven funds saw net outflows, though these were modest.

Regionally, the Americas saw the highest net inflows at $4.2 billion, with Europe and Asia also returning to positive territory. Looking ahead, while projections suggest potential outflows later in the quarter, these forecasts remain subject to change as market conditions evolve.