Hedge Funds Post Solid July, Now Up Over 5% for 2025 — Evening Brief – 08.29.25
Hedge funds advanced again in July, with PivotalPath’s Hedge Fund Composite Index climbing 1% and pushing year-to-date performance above 5%. The results mark one of the strongest mid-year stretches since the pandemic-era rebound, with about 72% of all strategies posting gains last month. PivotalPath said the industry is now “more agile and opportunity-driven” than at any point in 2025, as managers shift aggressively between sectors and asset classes to capitalize on volatility.
Equity sector-focused funds were the standout performers, up 3% in July, buoyed by a strong corporate earnings season and selective positioning in financials, industrials, and consumer sectors. This lifted their year-to-date performance to roughly 5%. Event-driven managers gained 1.6%, multi-strategy funds advanced 1.1%, and equity diversified, credit, and relative value strategies each added about 1%.
The picture was less favorable for quantitative equity funds, which fell 2.7%—their first monthly loss since October 2024. PivotalPath attributed the stumble to “factor volatility,” with losses in short books and crowding in long momentum trades tied to AI-driven mega-cap tech. Despite the setback, quant funds remain up 4.5% year-to-date. Global macro funds slipped 0.2%, while managed futures added a modest 0.5% for a second consecutive month but are still down nearly 9% in 2025 after choppy first-half conditions.
PivotalPath also noted a sector rotation under the surface. Many hedge funds scaled back their tech bets in July, particularly in semiconductors, software, and IT services, moving capital into consumer staples, defensive names, and select cyclicals. Momentum trades tied to AI unwound sharply, leaving some managers with drawdowns, while more discretionary funds fared better due to greater flexibility.
So far in 2025, about 75% of hedge funds tracked are positive, averaging an 8.95% gain, while the quarter in negative territory have seen average losses of 7.35%. The firm monitors the monthly performance of more than 3,000 institutionally relevant hedge funds, representing over $3 trillion of industry assets and nearly $500 billion in client hedge fund capital.
Looking ahead, PivotalPath described August as a “crucible” month for hedge funds, with uncertainty around Federal Reserve policy, interest-rate trajectories, and geopolitical events set to test positioning.