The hedge fund industry concluded 2024 with $4.51 trillion in assets under management, marking a 9.75% increase from the previous year, according to HFR, a research firm.
Total assets rose by $401.4 billion, the highest amount since 2021, primarily due to strong performance across various strategies.
The growth in hedge fund assets highlights the industry's significant influence in markets, characterized by a variety of trading strategies and assets.
This increase also indicates a renewed interest from investors, with net inflows totaling $10.47 billion last year, marking the first year since 2021 where more money entered than exited the industry. However, in the last quarter, outflows amounted to $12.57 billion.
Hedge fund assets have surged by nearly 56% since 2015, but attracting new investments has been challenging. Over the past decade, outflows exceeded inflows by $166.8 billion, demonstrating that industry growth has been primarily fueled by fund performance rather than new investments.
On average, hedge funds delivered a 9.83% return to investors in 2024, as per the HFRI Fund Weighted Composite index, with positive outcomes in equity, macro, event-driven, and relative value strategies. This stands in contrast to the S&P 500's 23.3% return.
Kenneth J. Heinz, president of HFR, mentioned that portfolio managers are gearing up for various market cycles in 2025, anticipating volatility and market shifts as investors react to new policies on interest rates, inflation, legislation, and tariffs.
He also stated, "Total global hedge fund industry capital rose to a fifth consecutive quarterly record as managers, institutions, and investors positioned for sweeping policy changes likely to impact U.S. and global financial market structures, regulations, and capital significantly."