Hedge Funds Deliver Best Year Since 2009 as 2025 Rally Broadens — Evening Brief – 01.21.26
Hedge funds closed 2025 with a flourish, posting a fund-weighted composite return of 12.6% for the year—the industry’s strongest annual performance since 2009—according to HFR.
December proved decisive, as managers leaned into risk and capitalized on late-year momentum. The result echoed patterns last seen in the aftermath of the 2008 financial crisis, when macro dislocations created outsized opportunities. In 2025, those opportunities reemerged across equity, event-driven, and macro strategies.
Performance dispersion was striking. For the full year, the top decile of HFR’s composite constituents gained 62.7%, while the bottom decile declined 12.8%, a spread of more than 75 percentage points. Roughly 75% of hedge funds posted gains in December, underscoring the breadth of the rally.
Several high-profile managers delivered standout results. Global equity strategies such as the Equitile M3 Fund, managed by Equitile Investments, were up more than 85% heading into year-end, according to data reported by HSBC. The Two Seas Global Fund gained an estimated 39.8%, driven by event-driven and idiosyncratic trades, including a high-conviction position in Core Scientific.
Large multi-strategy and macro platforms also benefited. AQR Capital Management and Bridgewater Associates reported gains across long/short equity and macro strategies, while D. E. Shaw posted positive results across its flagship funds.
Broad-based strategy performance underpinned the results. The HFRI Equity Hedge Index rose 1.8% in December, finishing the year up 17.3%—its strongest annual showing since 2020.
“Through these oscillating cycles of risk-on and -off sentiment, hedge funds generated strong performance with significant contributions from a wide range of exposures and strategies throughout the year, including healthcare, technology, convertible arbitrage, discretionary macro, commodities, systematic quantitative, shareholder activist and energy sub-strategies,” Heinz added.