Hedge fund performance improved in July to an average weighted return of 0.6%, up from 0.4% in the previous month, with over two-thirds of strategies ending the month in positive territory, according to the latest Monthly Hedge Fund Update from Citco.

Data from the $2tn AUA asset-servicer shows that fixed income arbitrage led the way with a 1.4% weighted average return, followed by multi-strategy and global macro.

Asset under administration categories were all positive in July. Funds with $1bn to $3bn AUA achieved the highest weighted average return of 1.1%, closely followed by funds with $200m to $500m with a weighted return of 0.8%, indicating solid performance among mid-sized funds.

Hedge fund capital flows also returned to positive territory over the month with net inflows of $3.3bn. Subscriptions reached $10bn ahead of redemptions of $6.7bn, taking net inflows year-to-date to $3.1bn.

Treasury payment volumes in July set a new record with 52,650 transactions, surpassing the previous high from December 2023, signalling continued strong market activity. Funds in the Americas ($1.9bn) and Europe ($1.6bn) both saw positive net inflows in July, while Asia funds saw net outflow of $0.2bn.