Hedge Fund Outlook H2 2024 (2024)

FAQs

Hedge Fund Outlook H2 2024? ›

Hedge Funds (HF) are up 4.2% year-to-date as of March 2024, which compares well with diversified global allocations, including 40/60 Equity/Bond portfolios which are up around +2.2% and have higher volatility. HF performance year-to-date was led by CTAs, EM focused and L/S Equity both Directional and Neutral.

Falling inflation levels remain stickier above central bank targets, supporting price dispersion and hedge fund alpha opportunities across asset classes. Potential shift in central bank posture and cross-asset correlations may support more directional strategies.

The Global Mid-Year Outlook 2024 Webinar

Growth is broadening out and inflation is unsticking itself. Profits are recovering and investment markets look exuberant. But, in H2, investors will have to contend with some economic cooling in the US as well as election and geopolitical uncertainty.

Tom McGoldrick, fund manager, AJ Bell

My pick for H2 2024 is the iShares Automation & Robotics UCITS ETF (RBOT).

25 July 2024 - Hedge funds achieved an overall weighted average return of 1.09% in the second quarter, marking a seventh consecutive quarter of positive returns, while Q2 also saw a return to net inflows for the first time since early 2022.

Hedge Funds (HF) are up 4.2% year-to-date as of March 2024, which compares well with diversified global allocations, including 40/60 Equity/Bond portfolios which are up around +2.2% and have higher volatility. HF performance year-to-date was led by CTAs, EM focused and L/S Equity both Directional and Neutral.

Overall, the consensus is that hedge funds will continue to grow but will adapt to lower fees, greater use of technology, and increased access to retail investors.

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Growth Slowing, but Recession Unlikely

"We're still expecting the sequential growth rates to drop sharply over the rest of 2024 and remain low through early 2025," Morningstar chief US economist Preston Caldwell wrote in his July economic outlook. He's forecasting 2.4% GDP growth for 2024 and 1.4% for 2025.

Are hedge funds doing well? ›

In any event, diversified hedge fund investing appears to have underperformed in modern (post-GFC) times. For the 15 years ending June 30, 2023, the HFR Fund-Weighted Composite Index had an annualized return of 4.0%.

One of the most profitable hedge funds of all times, Citadel generated $16 billion in profits for its investors in 2022, and earned $65.9 billion in net gains since 1990, making it the top-earning hedge fund ever.

The hedge fund industry is fiercely competitive, estimated to comprise around 15,000 hedge funds in the market. In 2024, we anticipate a further concentration of hedge fund flows, with a small percentage of managers likely attracting 90% of net assets within the industry.

Global growth is projected to be in line with the April 2024 World Economic Outlook (WEO) forecast, at 3.2 percent in 2024 and 3.3 percent in 2025. Services inflation is holding up progress on disinflation, which is complicating monetary policy normalization.

Overall, Yardeni Research forecasts S&P 500 operating earnings at $250 in 2024, up 12% vs 2023. He puts them at $270 in 2025 (up 8%) and $300 in 2026 (up 11.1%). These figures compare with analysts' consensus forecasts of $244.70 in 2024, $279.70 in 2025 and $314.80 in 2026.

In fourth quarter 2024 outlooks, Fannie Mae analysts anticipate 30-year rates at 6.4 percent, while the Mortgage Bankers Association predicts 6.5 percent. The National Association of Realtors projects 6.7 percent.