A volatile year came to a mixed close for hedge funds according to indexation and analysis firm HFR, with its HFRI Asset Weighted Composite Index rising 0.8% on the month, thanks largely to a good end to the year for Macro strategies, while other strategies struggled.

The headline index ended 2024 at +9.09%, which the HFRI Fund-Weighted Composite Index ended at +10.01%, in spite of a 0.19% decline in December. Within this, the HFRI Macro (Total) Index was up 1.11%, bringing the year-to-date return to +5.95%. The Macro Commodity ended the year strongly, with a 3.55% gain (year-to-date +6.67%), as did the Macro Currency Index at +2.21% (+3.76%), although in year-to-date terms, the latter was the worst performer.

The HFRI Relative Value (Total) Index was +0.19% in December, bringing year-to-date performance to +8.61%, being the only other Total index to end the year well. The HFRI Equity Hedge Total Index was down 0.74%, but still up strongly on the year at +12.3%, while the HFRI Event-Driven Total Index was down 1.27% for +8.73% in 2024.

The HFRO Multi-Manager/Pod Shop Index was flat in December for a 2024 return of +6.84%.

Performance dispersion tightened in December, as the top decile of the HFRI FWC constituents advanced by an average of +5.5%, while the bottom decile fell by an average of -7.4%, representing a top/bottom dispersion of 12.9% for the month. In November the dispersion in November was 17.7% and for the full year 2024, it was 49.0%. Approximately 45% of hedge funds produced positive performance in December, HFR says

“Hedge funds gained to conclude a volatile and uncertain 2024, navigating a very different market environment than the election euphoric, risk-on sentiment that dominated November, as equities declined and bond yields rose, and as persistent inflationary pressures tempered expectations for US Federal Reserve rate cuts in 2025,” says Kenneth Heinz, president of HFR. “Hedge fund performance was led by uncorrelated Macro and fixed income-based Relative Value Arbitrage strategies, underscoring the defensive outperformance of equity market declines and the benefits of strategy diversification.

“New fund launches increased while liquidations experienced a steep drop entering Q4, as record industry capital positioned for significant policy changes regarding trade, tariffs, regulatory oversight, and immigration,” he continues. “Institutions are likely to increase allocations to hedge funds which have demonstrated their strategy’s robustness through the volatile 2024 and which are tactically positioned for the diverse and unpredictable impacts of rapidly evolving policy changes in 2025.”