Equity Hedge Funds Post Worst Month Since 2020 as Volatility Spikes — Evening Brief – 04.20.26

Hedge funds faced a sharp reality check in March as market volatility surged, exposing vulnerabilities across equity-focused strategies even as industry inflows and new fund launches remained resilient.

The CBOE Volatility Index climbed to 35.3 on March 9—its highest level since April 2025—triggering broad dislocation across asset classes. Against that backdrop, long/short equity managers delivered their worst monthly performance since the COVID-era selloff, declining 4.4% in March, according to PivotalPath.

Losses were widespread but uneven. PivotalPath’s equity sector index fell 2.4%, with energy and healthcare funds showing relative resilience amid geopolitical-driven dispersion. In contrast, technology, media and telecom (TMT) strategies struggled significantly as positioning proved vulnerable to rapid shifts in sentiment.

Event-driven strategies fared even worse, declining 5% for the month and slipping to -2.5% year to date, while multi-strategy platforms dropped 1.9%, reflecting broad exposure to simultaneous equity and bond market weakness.

Not all strategies faltered. Volatility trading was the only segment to post gains in March, rising 1.5% and exceeding 4% year to date. Meanwhile, managed futures remain the top-performing strategy in 2026, up 4.6% through the first quarter, benefiting in part from rising commodity prices despite a modest March pullback.

Global macro managers also struggled in March, with the index down 2.3% as expectations for rate cuts in the U.S. and Europe failed to materialize. However, the strategy remains positive for the year, up 2.6%, reinforcing its role as a portfolio hedge during periods of uncertainty.