Hedge funds post an 8.3% return in Q2 2025, lifting year-to-date gains to 11% and marking an 11th consecutive positive quarter, Citco reports. Multi-Strategy and Equity funds lead, while Commodities decline. Investor inflows reach $17.8bn YTD, trading and treasury activity hit records, and large funds with over $3bn AUA outperform at 14.5% YTD.
Hedge funds continue their upward trajectory in 2025, marking the 11th consecutive quarter of positive returns. Data from the Citco group of companies (Citco) shows a weighted average return of 8.3% in Q2, building on a strong start to the year and taking the year-to-date (YTD) return to 11%.
The rebound follows a challenging start to the year caused by global trade tariffs. By Q2, 77% of hedge funds record positive results. Multi-Strategy funds and Equity-focused funds lead the performance charts with Q2 returns of 9.8% and 9.2% respectively, both achieving double-digit gains YTD.
Commodity strategies face headwinds, falling 3.6% in Q2 and posting a YTD return of -2.2%. Large funds with over $3 billion in Assets under Administration (AUA) outperform, returning 10.4% in Q2 and 14.5% YTD.
Hedge Fund Inflows Accelerate
Investor demand strengthens, with Q2 net inflows of $10.7 billion, driven by $56.6 billion in subscriptions outweighing $45.9 billion in redemptions. Combined with Q1 results, total net inflows for the first half of 2025 reach $17.8 billion.
Multi-Strategy funds attract the bulk of this capital, securing $12.1 billion in net inflows in Q2 after adding $3.5 billion in Q1 — making them the top choice among institutional and private investors.
Record Trading and Treasury Activity
Market activity surges in Q2, with Equities, Index, and Rates derivatives dominating transactions. Citco records its highest ever daily average trading volumes in this period.
Citco’s outsourced treasury services also see unprecedented demand. The Middle Office Solutions team processes over 170,000 payments in Q2, marking a new operational record.
Industry Insight
Declan Quilligan, Head of Hedge Fund Services at Citco Fund Services (Ireland) Limited, says:
“As global equity markets bounced back sharply in Q2 to test new highs, hedge funds have delivered a standout quarter of performance, adding to the positive start to the year.
While some strategies have excelled, the consistency of returns that hedge funds are delivering is also eye-catching – Q2 2025 marks their 11th consecutive quarter of positive returns, as they continue to deliver both diversification and returns for investors.
Investors are taking full advantage of this, with inflows increasing in Q2, and Multi-Strategy funds are the clear standout choice so far this year, with inflows outstripping other strategy types.”
About Citco
The Citco group of companies (Citco) is a network of independent companies providing asset-servicing solutions to the global alternative investment industry. With over $2 trillion in assets under administration and operations across 36 countries, Citco has served clients for more than 40 years.
Its Fund Services companies provide a comprehensive suite of middle and back-office solutions, including treasury and loan handling, daily NAV calculations, investor services, corporate and legal services, regulatory and risk reporting, and tax and financial reporting. Citco invests in technology and innovation to enhance service delivery and maintain its position as a leader in the asset-servicing industry.
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