Hedge Fund Returns Bounce in Q4 With over 70% Positive – Citco Report

The latest report from $1tn global hedge fund administrator Citco Group shows hedge fund managers bounced back strongly during the fourth quarter of 2022 despite the ongoing worries about inflation, recession and geopolitics. Funds administered saw a weighted average return of 4.11%, with more than 70% seeing positive returns. 

Positive returns were seen across every fund size, but it was the largest funds that performed the best. 

Multi-strategy and equities funds were the strongest performers, a significant turnaround from the previous quarter, notching average weighted returns of 4.81% and 4.58%, respectively. Fixed-income arbitrage was the next best performing strategy with a weighted-average return of 4.31%. 

The worst performers were event-driven hedge funds on both a weighted-average and median basis, with returns of -2.06% and 0.47%, respectively, while the only other negative performing strategy was commodities, with a weighted-average return of -0.65% and a median return of 0.7%, according to the report. 

Returns for large and small equities hedge funds were similar, as demonstrated by the median return of 4.66% compared to the weighted-average return of 4.58%. The size dispersion was significant among multi-strategy funds, which generated a median return of 0.57% versus the weighted-average return of 4.81%. 

Notably, fixed-income arbitrage funds recorded a median return of 2.86% versus their weighted-average return of 4.31% amid the higher interest rate environment. Global macro funds generated similar returns at 2.63% on a weighted-average basis and 2% on a median basis. 

Despite positive returns, the report showed that withdrawals of $55.9bn outpaced subscriptions of $47bn, with December leading $15.3bn in outflows.