Certain strategies led the way last year, such as those linked to cryptocurrencies, figures from Hedge Fund Research showed.

Total global hedge fund capital stood at an estimated $4.51 trillion, rising $401.4 billion for the full year, industry figures show.

Industry capital spiked to a fifth consecutive quarterly record as firms positioned for a new US administration and its likely economic impact.

Capital flows in the fourth quarter of 2024 showed a small net outflow of an estimated $12.57 billion. Last year was the first calendar year of net asset inflows since 2021 ($15.12 billion), according to Hedge Fund Research, a Chicago-based firm tracking the sector. 

The HFRI Fund Weighted Composite Index® rose 9.8 per cent in 2024, led by directional equity hedge and event-driven strategies, with the HFRI Equity Hedge (Total) Index leading all strategies with a gain of 12.0 per cent. The HFRI Event-Driven Index (Asset Weighted) rose 11.6 per cent. 

The volatile HFR Cryptocurrency Index skyrocketed 59.1 per cent in 2024 to lead all industry performance indices; the HFRI Multi-Manager/Pod Shop Index added 6.8 per cent for the year.

Credit and interest rate-sensitive fixed income-based relative value arbitrage logged the largest strategy-level capital increase in Q4 24, with assets increasing by an estimated $20.5 billion for the quarter.

Total relative value arbitrage capital stood at $1.223 trillion at the end of 2024. 

Capital managed by equity hedge strategies also increased in Q4, with strategy capital surpassing the $1.3 trillion milestone for the first time. 

Event-driven strategies, which categorically focus on out of favour, deep value equity and credit positions, experienced an estimated asset increase of $10.3 billion in the fourth quarter, with total capital at $1.28 trillion at the end of December.

Uncorrelated macro strategies increased by $8.6 billion, despite net asset outflows of $7.2 billion, bringing total macro capital to an estimated $711.3 billion.