Hedge funds post July loss, still draw $12bn

Hedge funds recorded a weighted average loss of 0.8% in July, the first monthly decline since April, Citco’s monthly hedge fund update showed. Equity strategies fell 2.7% and fixed‑income arbitrage slipped 1.2%. More than half of funds posted positive returns and the industry’s year‑to‑date return stood at 9.7%. The sector attracted $12bn of net inflows for the month.

Commodities led strategy performance, returning about 5% in July. Global macro returned around 1%, multi‑strategy about 0.5% and event‑driven roughly 0.4%. Citco reported that no major strategy group experienced net outflows in the month.

Performance varied by fund size. Managers with less than $200m in assets under administration declined 1.6%, the largest drop across size bands. Funds with $1bn to $3bn fell 1.2%, those with $200m to $500m lost 0.9%, and firms above $3bn slipped 0.7%. The $500m to $1bn group posted a small gain of 0.2%. Performance dispersion narrowed to 9.9% from 10.9% in June.

Net flows remained positive. Subscriptions of about $20bn exceeded redemptions near $8bn, producing $12bn of net inflows and extending seven consecutive months of positive flows. Cumulative net inflows for 2026 reached $86.9bn. Multi‑strategy funds drew roughly $5.3bn in July, taking their year‑to‑date total to $49.2bn. Hybrid funds received $2.4bn, equity strategies $2bn, funds of funds $1.5bn and global macro about $0.7bn.

Larger managers captured the bulk of new capital. Firms with more than $10bn in assets under administration attracted $6.5bn in July, taking their year‑to‑date inflows to about $67bn. Managers with $5bn to $10bn added $2.7bn, those with $1bn to $5bn drew $2.3bn, and smaller funds under $1bn recorded roughly $0.5bn. By region, Europe received $5.9bn of inflows, the Americas $4.6bn and Asia $1.6bn.

Citco also reported increased middle‑office activity. Treasury payments reached a monthly high of 74,303 in July, up 22% from July 2025 and above June’s total. Trade volumes fell 4.2% from June, with lower activity in rate and index derivatives offset by a about 17% rise in commodity and equity derivatives. Credit default swap transactions increased roughly 10% month‑on‑month. Citco reported a straight‑through processing rate of 98.1% for July.