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Hedge funds log first monthly loss in three months as inflows hold

July hedge fund performance fell 0.8% on average, but the industry still pulled in $12bn of net inflows and kept year-to-date gains near double digits at 9.7%.

Reported · Written up by our desk · Hedge Funds

Hedge funds posted their first monthly loss since the start of the second quarter in July, dragging the industry’s weighted average return down 0.8% as equity strategies and fixed-income arbitrage weakened, according to Citco’s latest monthly hedge fund update cited by Hedgeweek.

The pullback followed three straight months of gains through the end of June. More than half of funds still generated positive returns during the month, leaving the hedge fund industry’s year-to-date return near double digits at 9.7%. By strategy, equity strategies fell 2.7% on a weighted average basis, while fixed-income arbitrage declined 1.2%.

Commodities were the strongest category, returning 5% in July, followed by global macro at 1%, multi-strategy at 0.5%, and event driven at 0.4%. Performance was also weaker among smaller funds, with the biggest declines among funds with less than $200m in assets under administration, down 1.6%.

Fundraising remained positive even as performance slipped, with hedge funds attracting $12bn of net inflows in July, extending monthly inflows to seven straight months. Subscriptions of $20bn exceeded $8bn of redemptions, taking cumulative net inflows for 2026 to $86.9bn, and multi-strategy funds led with a further $5.3bn in inflows. Europe remained the strongest regional destination for capital in July, attracting $5.9bn.

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