Hedge Funds Post Strongest Monthly Gain in April Since 2020 — Evening Brief – 05.29.26
Hedge funds delivered a powerful rebound in April, erasing a sharp March drawdown and posting some of their strongest returns in more than a decade as risk appetite swung back in favor of equities, event-driven trades and macro strategies.
Hedge Fund Research’s HFRI Fund Weighted Composite Index jumped 4.8% for the month, its best gain since November 2020 and the second-strongest monthly return since May 2009. Equity hedge and emerging markets managers led the move, supported by technology and AI momentum, easing geopolitical worries and renewed optimism around IPO and M&A pipelines.
“Hedge funds delivered historic gains in April, fueled by easing geopolitical fears, rebounding tech and AI momentum, Fed leadership clarity, and optimism around a record IPO cycle,” said Kenneth J. Heinz, President of HFR. “The sharp rebound marked a dramatic reversal from the risk-off sentiment in March, though managers remain tactically positioned amid expectations of renewed market disruptions and volatility.”
Equity Hedge strategies were the standout, with the HFRI Equity Hedge (Total) Index soaring 7.3%—its strongest month since November 2020 and the fourth-best since inception in 1990. The HFRI EH: Technology Index surged 14.8%, while the EH: Fundamental Growth Index gained 9.6%. The HFRI Emerging Markets Index added 5.7%, its best since April 2020.
Event-Driven managers also posted outsized gains as expectations for a robust 2026 deal calendar took hold. The HFRI Event-Driven (Total) Index climbed 5.2%, its second-strongest month on record, led by the ED: Special Situations Index at 9% and ED: Activist Index at 8.4%.
Macro and relative value strategies participated as well. The HFRI Macro (Total) Index rose 1.8%, helped by active trading and systematic diversified/CTA approaches, while the HFRI Relative Value (Total) Index gained 1.8% amid steadier rate expectations and clearer Federal Reserve leadership.
Performance dispersion widened meaningfully. The top decile of HFRI constituents returned an average 18.4% in April, while the bottom decile fell 4.1%, a 22.5 percentage point gap. Over the 12 months through April, the spread was even starker, with the top decile up 90.6% and the bottom decile down 6.6%. Roughly 85% of hedge funds generated positive performance in April.