Thoughts
Podcast: Hedge funds tested but inflows hold firm – plus the lowdown on our multi-strategy event in New York
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In the latest AFI podcast with Citco, Declan Quilligan, Head of Hedge Funds, and Peter Kane, Head of Hedge Funds – North America, take you inside the key trends shaping the global hedge fund industry.
This episode looks back at Q3, when hedge funds came back down to earth after a double-digit Q2. The weighted average return dipped to -0.7%, although more than half of funds still finished the quarter in positive territory.
Investors have nonetheless continued to back hedge funds this year, with net inflows in every quarter. Q3 was no exception: inflows totalled $36bn, just shy of the $39.1bn seen in Q2, taking the year-to-date total well above $100bn.
Host Will Wainewright unpacks all of this and more, before turning the spotlight on North America and the multi-strategy market, with Peter sharing insights from our recent joint event in New York City.
Key trends
Q3 Report:
- A softer quarter, but a strong year: returns dipped to -0.7% after a standout 12.3% Q2, yet 53% of funds were positive and year-to-date returns stand at 10.5%. Commodities led Q3 (11.9%), while global macro leads year to date (26.4%).
- Investor demand remains robust: net inflows of $36bn, led by the Americas ($20.8bn), put the industry on track for a record year, although inflows eased as the quarter progressed.
- Diversification over short-term returns: multi-strategy and hybrid funds attracted around 77% of net inflows, despite multi-strat returning -1.4% in Q3.
Citco and AFI Multi-Strategy event key takeaways:
- Complexity is outpacing operating models: from onboarding to investor reporting, operations are becoming more complex as competition intensifies and demand grows for SMAs and customised vehicles.
- AI is moving into production: firms already use AI for document extraction, research and review, but governance and human oversight must keep pace.
- Outsourcing set to deepen: clean data, well-governed AI and scalable specialist providers will be key to managing complexity.
Citco Hedge Fund reports – In-depth data across performance, capital flows, trade and treasury volumes.