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Hedge funds delivered a tenth successive quarter of gains in Q1, despite mounting market disruption ahead of President Trump’s 2 April announcement on tariffs.
More than three-fifths (62%) of hedge funds gained in Q1, hitting an average weighted advance of 2.8%. Multi-strategy was the top performer, up 4.7%, while global macro rose 4.5%.
There were net inflows of $7.1bn, signalling continued interest in hedge funds amid the volatility, and record trading volumes, with the most activity in equity and equity options, index futures and bank debt.
Other key findings included:
- Strategy: Multi-strategy and macro was followed by equity and commodities-focused strategies, both up 1.6% on an average weighted basis, while event-driven strategies were down 3.4%.
- Size: The largest funds outperformed, with $3bn+ players scoring a weighted average return of 4.6%, beating smaller size brackets.
- Flows: Multi-strategy funds saw the most activity throughout the quarter, with net inflows in January and February, before outflows in March, leaving them with net inflows of $3.5bn overall. This reversed some of the outflows seen in the previous quarter.
- Treasury payments: Stood at 163,971 in the first quarter, up 16% versus the corresponding quarter last year but down from the record 164,971 payments seen in Q4.
“Hedge funds faced headwinds from tumbling markets in the first quarter of 2025 as investors reacted to a series of trade tariff announcements which have caused upheaval across the globe,” said Declan Quilligan, head of hedge fund services, Citco Fund Services (Ireland).
“Nonetheless, funds continued to deliver for investors with the 10th consecutive quarter of positive returns, and investors opted to increase their positions in hedge funds, with inflows to Multi-Strategy funds standing out at a strategy level.
“The path ahead is very uncertain, with markets having to contend with near-daily developments around tariffs since the end of Q1, and we have seen the sell-off intensify at the start of the second quarter. If the situation escalates, investors may well look to hedge funds to offer diversification away from the worst of the turmoil.”