Exploring the key drivers behind the recent decline in PE exit activity

Strong second half in 2024 to close a remarkable year for Hedge Funds. Equity Hedge managers have thrived thanks to healthy sector dispersion. No signs of slowdown ahead. While Merger Arbitrage faced regulatory issues Event-Driven overall benefitted from market strength. Discretionary macro capitalized on divergent policies and global shifts, while Systematic strategies lagged. Relative Value managers sailed through a flawless year with tailwinds still in their favor. Digital asset strategies have outpaced the broader hedge fund industry while shielding investors from crypto volatility.

Global markets saw mixed but ultimately positive performance in H1. January opened strong, driven by policy shifts and gains in energy, healthcare, and European equities. February and March were volatile as trade tariff concerns weighed on sentiment, with US tech leading losses and growth stocks sharply underperforming value. Interest rates fell globally early in the period, except for the US where the Dollar fluctuated, and commodities were mixed. April brought heightened volatility but improved sentiment by month-end, with renewed optimism around trade negotiations and potential rate cuts. May saw a strong rebound, led by technology and improving global growth prospects, with Germany and Japan topping regional equity gains. Overall, risk appetite recovered heading into summer.