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Hedge funds delivered one of their strongest monthly performances of the decade in April, rebounding sharply from March’s losses as volatility eased and risk appetite returned across global markets, according to Citco’s latest Monthly Hedge Fund Update.
The weighted average return across the $1.3tn of hedge fund assets administered by Citco reached 5.6% in April, with nearly 90% of funds posting positive returns. The recovery lifted year-to-date industry performance to 4.1%.
Equity-focused hedge funds led the rebound with average weighted returns of 7%, while global macro funds returned 6% as managers benefited from reversals in rates, currency and commodity markets following the sharp dislocations seen during the Iran-related geopolitical shock earlier in the year. Multi-strategy funds gained 4.7%, while commodities strategies advanced 2.8%.
Fixed income arbitrage and event driven managers also returned to positive territory, posting gains of 1.9% and 1.3% respectively.
Largest hedge funds lead performance recovery
In a reversal from previous months, the industry’s largest managers generated the strongest returns. Funds with more than $3bn in assets under administration posted weighted average returns of 6.7%, outperforming smaller peers across all asset brackets.
Citco also noted a widening dispersion in manager performance, with spreads between top and bottom performers increasing to 11.2% from 10.2% in March, highlighting the growing divergence in manager positioning and risk-taking.
Investor inflows remain resilient
Investor demand remained robust despite recent market turbulence. Hedge funds attracted net inflows of $9bn in April, more than double the previous month’s level, as subscriptions of $15.7bn comfortably exceeded redemptions.
Multi-strategy funds dominated allocations with $7.2bn of net inflows, while equity, macro and fund-of-funds strategies all remained positive. Regionally, Europe continued to lead fundraising activity, attracting $4.3bn of net inflows during April and $24.2bn year-to-date.
Beyond investment performance, Citco said hedge fund managers are increasingly demanding more sophisticated data integration and operational support from administrators, as firms seek faster access to structured portfolio data and automated analytics rather than traditional static NAV reporting packages.