A “Stellar” November for Hedge Funds: Report
Hedge funds saw broad gains in November but are still challenged by investor inflows, according to industry data.
Citco, a provider of alternative investment asset services, announced that over 75% of funds had positive returns, a considerable increase from October’s 36.4%.
Citco’s funds outperformed the competition with an overall weighted average return of 3.3%, led by equities funds at 5.1%. Multi-strategy and fixed income arbitrage funds trailed closely behind, with 2.5% and 2% returns, respectively.
Despite this overall achievement, commodities funds continued to perform poorly, with a weighted average return of -0.4%, highlighting the ongoing difficulty for resource-focused strategies.
In terms of fund size, all strategies produced positive returns in November. The highest performing funds were from $200 million to $500 million, with a weighted average return of 3.9%, closely followed by the largest funds above $3 billion, with a 3.4% return.
Capital flows reversed in November, with net withdrawals totaling $2.9 billion. Equity funds were the largest source of redemptions, with $4.8 billion in withdrawals outweighing $900 million in subscriptions.
Multi-strategy and hybrid funds, on the other hand, saw net inflows of $500 million and $400 million, respectively, indicating continued investor interest.
Asian funds witnessed the largest net outflows of $3.2 billion, while European funds saw net outflows of $100 million. US-based funds, on the other hand, defied the trend, generating net inflows of $400 million.
Looking ahead to the final quarter, anticipated net withdrawals have increased to $25.2 billion, with December expecting to see heightened activity as investors position themselves for 2024.
According to Citco, long-term trends such as energy transition and population increase will fuel significant growth in global infrastructure investment. Established alternative managers, intrigued by the investment potential, are increasingly delving into infrastructure for the first time, according to the report.