The hedge fund industry recorded its first quarterly loss since 2022, ending a robust three-year run of positive returns. According to data from Citco, which administers approximately $1.3 trillion in assets, global market disruptions driven by geopolitical tensions in the Middle East erased early-year gains. The sector finished Q1 2026 with a weighted average return of -1.4%.

Performance was notably fractured across different investment styles. High-volatility strategies bore the brunt of the March downturn. Event-driven strategies dropped 5%, while Multi Strategy and equities dipped by 3.9% and 1.8%, respectively.

Conversely, volatility acted as a tailwind for select desks. Global Macro funds emerged as the quarter’s victors with an 8.5% gain, capitalizing on shifting interest rate expectations. Commodities followed closely, with a 7.1% return, bolstered by rising raw-material prices linked to global instability.

Despite the dip in performance, investor appetite reached levels not seen in years. The industry saw one of its strongest fundraising periods this decade, securing $24.1 billion in net inflows. This was driven by $69.8 billion in new subscriptions, which comfortably offset $45.7 billion in redemptions.

Multi-strategy funds remained the favorite for new capital, attracting $10.5 billion, while Global Macro paradoxically saw net outflows of $1 billion despite its top-tier performance.

The quarter was defined by frenetic activity. Trading volumes hit record highs, with January alone averaging over 37 million transactions per day. This surge in high-frequency trading and treasury activity suggests that while returns turned negative, liquidity and market participation remain at historic peaks.

End Notes

Source: https://www.hedgeweek.com/hedge-funds-post-first-quarterly-loss-since-2022-as-q1-volatility-hits-returns/