Sustained hedge fund performance indicated by Citco's Q2 data
The second quarter of 2025 has been a standout period for the hedge fund industry, with strong performance and increased inflows of capital, according to data reported by Citco.
Q2 2025 Performance Highlights
Citco's network of hedge funds delivered a weighted average return of 8.3% in Q2 2025, with 77% of funds delivering positive returns. The year-to-date (YTD) return through the first half of 2025 was 11%.
Multi-strategy funds were the clear standout choice for inflows so far this year, achieving a weighted average return of 9.8% in Q2. Equity-focused funds followed closely behind with returns of 9.2%. All other strategies showed positive returns except commodities, which had a negative return of -3.2% for the quarter and -2.2% YTD.
Hedge funds with the largest assets under administration (AUA) made the highest weighted average return at 10.4% in Q2, with a YTD return of 14.5%.
Trading Activity and Capital Flows
Trading activity has accelerated since January, with equities, equity index, and rates derivatives strategies dominating. Hedge funds saw net positive inflows of $10.7 billion during Q2, with subscriptions totaling $56.6 billion and redemptions of $45.9 billion. Year-to-date net inflows reached $17.8 billion.
Investor Interest in Hedge Funds
Investors are increasingly showing their interest in hedge funds, with Q2 seeing an increase in inflows compared to other strategy types. Multi-strategy funds achieved net inflows of $12.1 billion in Q2, an increase from $3.5 billion in the previous quarter.
Record-Breaking Performance for Citco
Citco's network manages over $2 trillion in assets under administration (AUA) and spans across 36 countries. In Q2 2025, most hedge funds administered by Citco delivered positive returns. The company's middle office solutions team processed over 170,000 payments, a new record for outsourced treasury operations.
Declan Quilligan, head of Hedge Fund Services at Citco, stated that hedge funds have delivered a standout quarter of performance in Q2 2025.
Conclusion
The strong performance and increased capital inflows in Q2 2025 suggest a positive outlook for the hedge fund industry. The continued growth in assets under management and the positive returns delivered by hedge funds provide both diversification and returns for investors. With multi-strategy funds leading the way, it will be interesting to see how the industry performs in the second half of 2025.
[1] Data source: Citco's Hedge Fund Performance Report, Q2 2025. [2] Data source: Citco's Hedge Fund Asset Flows Report, Q2 2025. [3] Data source: Citco's Hedge Fund Trading Activity Report, Q2 2025. [4] Data source: Citco's Hedge Fund Middle Office Solutions Report, Q2 2025. [5] Data source: Citco's Hedge Fund Services Annual Report, 2024.
Investors showed a growing interest in hedge funds, leading to a significant net inflow of $10.7 billion in asset servicing during Q2 2025. This inflow was primarily allocated to multi-strategy funds, which provided an impressive return of 9.8% in Q2, demonstrating strong performance in finance and investing.
