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Hedge funds scored hefty returns in 2024, when U.S. stocks and the dollar dominated global markets. Despite an election-fueled "America first" narrative in the broader market, some diversified funds still notched outsized gains.
Top hedge funds put up big numbers in 2024, which was dominated by U.S. markets that got a jolt from Donald Trump's presidential election victory.
Despite an "America first" narrative that helped boost the S&P 500 23% and the U.S. dollar index by about 7% last year, some multi-strategy funds with bets across different asset classes and geographies saw outsized gains.
For example, Discovery Capital Management soared 52%, a person familiar with the matter said, confirming other reports. The hedge fund declined to comment.
That builds on top of a 48% surge in 2023, making it one of the best hedge funds on Wall Street that year, according to Bloomberg.
Meanwhile, D.E. Shaw's Oculus, a macro-oriented multi-strategy fund, returned 36.1% in 2024, and the Composite fund, its largest multi-strategy fund, returned 18%, according to a person familiar with the firm’s results. D.E. Shaw declined to comment.
While their performance is often compared to the S&P 500's, hedge funds point out that they don't benchmark themselves to the large-cap U.S. stock index and instead seek to hedge against market downside while providing consistent, risk-adjusted gains that aren't necessarily correlated with the S&P 500.
In addition, hedge funds often employ different strategies across various offerings. Citadel's flagship Wellington multi-strategy fund returned 15.1% in 2024, a person familiar with the matter confirmed, while its Tactical Trading fund returned 22.3%, and its Equities fund scored an 18% gain. Citadel declined to comment.
Elsewhere, Millennium Management climbed 15%, according to reports. The hedge fund didn't immediately respond to requests for comment.
With such gains, those funds were on track to outperform their peers. Through the first 11 months of 2024, hedge funds overall averaged a 10.7% return, according to the latest data from PivotalPath cited by Reuters. That's up from a 5.7% average return in the same period in 2023.
And among global hedge funds taking long and short bets on stocks last year, the total weighted average return came in at 12.75%, according to a private Goldman Sachs note that was seen by Reuters.
"It could be argued that 2024 was the year of the stock picker, with equity hedge funds playing dispersion well and really leaning into creative shorting strategies and a careful use of leverage to drive returns," said PivotalPath CEO Jon Caplis told Reuters.
This story was originally featured on Fortune.com