Hedge fund trade reaches $4.5 trillion in 2024

By Carolina Mandl

NEW YORK (Reuters) – The hedge fund trade ended 2024 with $4.51 trillion in belongings underneath administration, a 9.75% enhance from the earlier yr, analysis agency HFR mentioned on Friday.

Whole (EPA:TTEF) belongings elevated by $401.4 billion final yr, the very best quantity since 2021, primarily pushed by a robust efficiency throughout completely different methods.

WHY IT’S IMPORTANT

The expansion in hedge fund belongings underscores how influential this much less regulated and leveraged trade, which makes use of an enormous array of buying and selling methods and belongings, is in markets.

It additionally exhibits that hedge funds regained a little bit of traction amongst traders. Hedge funds’ web inflows final yr totaled $10.47 billion, the primary calendar yr through which more cash got here in than out of the trade since 2021. Within the final quarter, nevertheless, outflows amounted to $12.57 billion.

CONTEXT

Hedge funds’ belongings have grown by virtually 56% since 2015, though the trade has struggled to lure new cash from traders. During the last decade, outflows surpassed inflows by $166.8 billion, exhibiting that funds’ efficiency has pushed the trade progress, not new cash.

BY THE NUMBERS

On common, hedge funds posted a 9.83% acquire to traders in 2024, in keeping with HFRI Fund Weighted Composite index, with optimistic leads to fairness, macro, event-driven and relative worth methods. That compares with a 23.3% return of the S&P 500.

KEY QUOTE

Kenneth J. Heinz, president of HFR, mentioned portfolio managers are “getting ready for a variety of market cycles, with the likelihood for volatility and dislocations as traders adapt to new insurance policies relating to rates of interest/inflation, laws and tariffs” in 2025.

“Whole international hedge fund trade capital rose to a fifth consecutive quarterly report as managers, establishments and traders positioned for sweeping coverage adjustments that are prone to have important and far-reaching implications for U.S. and international monetary market construction, regulation and capital,” he added.