Hedge Funds: $6B Inflow & Strong May Performance

The hedge fund industry saw a sharp acceleration in fundraising activity during May, with $6 billion in net inflows — marking one of the strongest monthly fundraising results in recent years. According to Citco’s latest data, gross subscriptions reached $17.4 billion for the month, easily outpacing $11.4 billion in redemptions, as strong year-to-date performance continued to drive investor interest.  

Strong inflows continue to track robust industry performance. Citco reports 79% of funds posted positive returns in May, with the industry up 3.2% for the month — second only to January’s 4% gain — bringing average year-to-date returns to over 7%. Equity-focused funds led performance (+4%), followed by multi-strategy (+3.2%), fixed income arbitrage (+2.1%), event-driven (+1.4%), and global macro (+1.1%).     

Multi-strategy funds remain the dominant magnet for capital, drawing $7.3 billion in net inflows in May and $14.7 billion year-to-date. The ongoing demand for diversified, cross-asset managers reflects institutional allocators’ appetite for strategies that can adapt across macro regimes and deliver uncorrelated returns. Equity-focused and hybrid strategies also posted healthy net inflows of $1.2 billion each, while fund-of-funds ($600 million) and arbitrage funds ($500 million) attracted smaller but steady commitments. Meanwhile, global macro funds (-$2.5 billion) and emerging markets funds (-$2.3 billion) continued to face redemption pressure.  

Fund size remains a key differentiator in capital formation. Mid-sized funds with $5 billion to $10 billion in assets under administration (AUA) were the standout segment, generating $5.3 billion in net inflows for May — their strongest month of 2025 — and pushing year-to-date net flows to $7 billion. Large-scale managers ($10 billion+ AUA) added $1 billion in net new capital, bringing cumulative inflows to $14.2 billion for the year. In contrast, managers with $1 billion to $5 billion AUA saw $1 billion in net redemptions, while sub-$1 billion funds generated modest net inflows of $800 million.  

From a regional perspective, U.S.-based managers captured the lion’s share of new capital, with $7.9 billion in net inflows for May and $15 billion year-to-date. Europe reversed course from its strong April, recording $2.1 billion in net outflows last month, while Asia managers saw a small inflow of $300 million, leaving regional year-to-date flows slightly negative.

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