Hedge funds delivered a 3.2% weighted return in May, with 79% positive. Equity strategies led at 4%. Net inflows hit $6B, led by multi-strategy funds ($7.3B). Americas dominated inflows ($7.9B), while Europe saw outflows ($2.1B). Trade volumes dipped 7.8%, but treasury payments remained robust. Citco’s analytics aid in navigating volatility. YTD returns reached 7.1%, signalling resilience amid easing trade fears.
Hedge funds administered by Citco achieved their second-best monthly return of 2025 in May, with nearly 80% of funds posting positive results. The overall weighted average return stood at 3.2%, bringing the year-to-date (YTD) figure to 7.1%. This rebound was driven by easing concerns over trade tariffs and improved market sentiment.
Equity strategies outperformed all others, delivering a weighted average return of 4%. Multi-strategy funds followed closely at 3.2%, while fixed income strategies posted a 2.1% return. Event-driven and global macro strategies also remained positive at 1.4% and 1.1%, respectively. However, commodities strategies lagged, ending the month with a -1% return.
Funds with assets under administration (AUA) exceeding $3 billion led the performance, achieving a 3.6% return. Smaller funds, particularly those with less than $200 million in AUA, posted more modest gains of 1.8%. The rate of return spread between the top and bottom performers narrowed slightly to 8.9%, down from 9.6% in April.
Investor flows: Multi-strategy funds attract significant inflows
May 2025 saw hedge funds attract $6 billion in net inflows, marking one of the highest monthly totals in recent years. Subscriptions reached $17.4 billion, outweighing redemptions of $11.4 billion. Multi-strategy funds were the primary focus for investors, drawing $7.3 billion in net inflows and bringing their YTD total to $14.7 billion.
Equity and hybrid strategies each secured $1.2 billion in net inflows, while fund of funds and arbitrage strategies recorded $0.6 billion and $0.3 billion, respectively. In contrast, global macro and emerging markets strategies experienced net outflows of $2.5 billion and $2.3 billion.
Regionally, funds in the Americas dominated with $7.9 billion in net inflows, contributing to a YTD total of $14.9 billion. Europe saw a reversal of April’s trend, with net outflows of $2.1 billion, while Asia posted modest inflows of $0.3 billion but remained negative YTD.
Trade volumes and treasury activity
Trading activity among Citco-administered funds declined in May after a record-breaking April, with volumes dropping by 7.8% month-over-month. High-frequency trading strategies and large multi-strategy platforms were particularly affected, though 85% of managers maintained stable activity levels.
Key areas contributing to the dip included credit default swaps, index derivatives, and commodity derivatives. Equity options trade volumes, which surged in April, fell by 34% in May. Despite this, Citco’s infrastructure maintained high efficiency, with a straight-through processing (STP) rate of 96.7%.
Treasury payment volumes, while down from April’s peak, remained robust, with 56,248 payments processed in May—a 13% increase compared to the same period last year. The quarter is on track to set new records, with 115,727 payments processed over the past two months.
Citco’s portfolio analytics
In an environment of shifting market dynamics, Citco’s Portfolio Analytics offers fund managers a comprehensive tool to assess exposures, leverage, and performance. The interactive dashboard provides real-time analytics, including scenario analysis and stress tests, enabling clients to make informed decisions amid volatility.
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