Hedge fund average returns up 1.5% in July - Citco

Hedge funds had in July their second best month since the start of the year driven by equities and fixed income arbitrage funds.

A survey from Citco based on the performance of hedge funds with $1.8 trillion (£1.4tn) under management said these investors reported returns up 1.5% in July, below the 1.8% in June but above every other month this year since January’s 3.6%.

The hedge fund administrator said equities were the best performing funds last month with an average return of 1.8%, down from 2.9% the previous month.

Fixed income arbitrage funds rose 1.6% in July, narrowly ahead of global macro funds which reported monthly returns up 1.5%.

All alternative investors were in the black last month, with commodities funds (1.3%) reversing their poor performance in the first half of this year while event driven funds returned just 0.4%, which was down from 2.1% in June.

By size of fund, the largest funds fared the worst while the second smallest funds did the best last month, according to Citco.

Funds with more than $3bn under management returned 1.2% on average in July while those with between $200m and $500m had the highest weighted average return of 2.6%.

Their performance contrasted last month with the investments into these vehicles as the funds saw net outflows of $2.7bn, based on $9bn of redemptions versus $6.3bn of subscriptions.

The flows in July buck a trend over the past 18 months of net inflows in the first two months of any quarter followed by outflows in the last month of the quarter.

Hedge funds have had a solid 2023, with every month this year reporting positive returns. January was the best month with a weighted average return of 3.6%, followed by June (1.8%) and July (1.5%).

Citco issued at the start of this month a report that suggested trade matching, where buy and sell orders are aggregated, is becoming increasingly popular among hedge funds.