Strategies such as in the macro field – where funds try and ride big trends in economics, interest rates and currency moves – performed well during the quarter.

Hedge fund capital continued to rise after gains made in the first three months of 2024, reaching $4.31 trillion in the second quarter. Political dramas in the UK, France and US, have played into the sector’s hands, according to Hedge Fund Research, the Chicago-headquartered group tracking the space. 

The latest figures show a rise of about $11 billion for Q2 from the previous quarter. 

Relative value arbitrage and macro strategies led performance, although there were outflows from the equity hedge and event-driven areas. The HFRI Macro Index Asset Weighted Index gained by 6.1 per cent in the first half of 2024, alhough the Index was little changed for the second quarter after posting the largest quarterly gain in the last 20-plus years in Q1 2024.

(Relative value arbitrage tries to exploit pricing discrepancies between historically correlated securities; macro strategies profit from broad market swings caused by political or economic events. Equity hedge is a strategy whereby bets on market rises are offset by positioning for possible declines; event-driven strategies seek to profit from price moves caused by events such as mergers and corporate takeovers.)

The HFRI Fund Weighted Composite Index® advanced +5.0 per cent in the first six months of 2024.

One standout sector was the the HFR Cryptocurrency Index, with returns of 25.5 per cent in the first half of this year, reflecting strong gains by cryptos such as bitcoin.

“Even more so than the prior quarter, managers remained focused on unprecedented geopolitical and election risks and opportunities, with these not only including geopolitical/military conflict, but also including ongoing volatile inflation, interest rates and macroeconomic considerations which have dominated the past two years,” Kenneth J Heinz, president of HFR, said.