In 2024, multistrategy hedge funds experienced a strong year, with many achieving double-digit gains. Notably, Millennium Management and Citadel both achieved returns of around 15%, marking a significant performance for these industry giants.

Wall Street bankers expect initial public offerings to rebound this year as private equity groups aim to divest key holdings amid a strong US equities market. Software company Genesys and medical device producer Medline are among those that have already filed for IPOs, and an influx of filings is seen as likely in the first six months of this year, amid expectations that the Federal Reserve will continue cutting interest rates and that the incoming Trump administration will reduce taxes and ease regulations.

Borrowers are increasingly expanding "disqualified lender" lists in syndicated loan documents to include not only competitors, but also distressed investors perceived as aggressive. While this gives lenders more control over their debt, it could reduce liquidity in the secondary market and potentially lead to litigation.

Top City of London law firms are optimistic about a rebound in mergers and acquisitions in 2025, driven by both private capital and corporate clients. They are also focusing on the impact of generative AI, cybersecurity threats, and the potential implications of political changes, including the election of Donald Trump as the next US president, on the deals market.

Private equity firms, with over $500 billion in uninvested capital from funds closed in 2020 and 2021, face mounting pressure to deploy those resources in 2025. Elevated interest rates have slowed deal activity, and while some managers may seek more time, investors are cautious about approving such requests, weighing the benefits of disciplined investment against the opportunity cost of idle capital.

Global hedge funds focused on long and short stock bets achieved their highest average returns since 2020, with a 12.75% increase in 2024, according to Goldman Sachs. Systematic equity traders performed even better, with a 20% return. Despite these gains, the funds did not surpass the S&P 500, which rose more than 20% last year.

The Securities and Exchange Commission under the leadership of Paul Atkins would likely focus on capital formation, right-sizing regulation, and driving investment opportunities, says Commissioner Hester Peirce. In a wide-ranging interview, Peirce also highlights the need to revisit rules such as the Custody Rule and Staff Accounting Bulletin 121, while maintaining effective enforcement.

The Cayman Islands are an attractive location for fund managers due to their tax neutrality, political and economic stability, and efficient legal system, making it easy and fast to set up funds. However, fund managers must still weigh the impact of indirect taxes and the need to navigate anti-money laundering regulations, which might add complexity for some investors.

Outgoing Commodity Futures Trading Commission Chair Rostin Behnam used his final speech before stepping down to warn about the "gamification" of derivatives markets. Behnam emphasized the need for vigilance amid geopolitical and macroeconomic stresses and highlighted the blurring line between hedging and speculation, which he said is becoming "increasingly indistinct".

The European Securities and Markets Authority's detailed proposals around reporting requirements could drive more businesses away from the UK, some market participants believe. ESMA's proposed requirements could be complicated enough to make it less attractive for EU regulated firms to clear at CCPs, including LCH, they say.