Managed Futures Regain Footing as Equity HFs Lean into Healthcare, Financials — Evening Brief – 12.18.25
Hedge fund performance data from PivotalPath shows a market increasingly characterized by divergence and developing pockets of risk as investors position for 2026. Managed futures strategies continued their rebound through November, rising 7.5% over the past six months, with the PivotalPath Managed Futures Index up 1.2% in November. The recovery follows a bruising start to the year, when CTAs fell 9.7% in the first half of 2025 amid choppy macro conditions.
PivotalPath attributes the rebound to cleaner, more persistent trends across rates, FX, and commodities, which have allowed systematic managers to stay in profitable trades rather than being whipsawed. Institutional allocators, including pension funds such as IPERS and Indiana PERF, have taken notice, continuing to search for new CTA managers as part of broader diversification efforts. Strategically, that demand suggests investors expect macro volatility to remain elevated, keeping trend-following strategies relevant as portfolio shock absorbers.
Meanwhile, equity long/short managers remain the industry’s performance leaders. The PivotalPath Equity Sector Index is up 22.7% year-to-date, with a 2.7% gain in November, powered by a surge in healthcare stocks. The Healthcare Index climbed 8.3% last month and is up 35.2% year-to-date, as M&A speculation accelerates amid patent cliffs and strong clinical results. Financials posted 3.1% gains, driven by consolidation among regional banks with solid deposit bases.
Yet the tailwinds come with warnings. PivotalPath highlights elevated hedge fund correlations to equities, signaling that a meaningful selloff could reverberate sharply across strategies. November also revealed vulnerabilities in the high-flying AI trade: TMT-focused funds fell 2%, suffering the worst week since April before partially recovering. Heavy capex expectations and stretched valuations mean managers increasingly demand real earnings delivery to justify multiples.
December has already validated those concerns. Weakness in Oracle and Broadcom spilled across the AI complex, dragging broader markets lower and reaffirming that when market momentum is narrowly concentrated, trouble in a few bellwethers can quickly ripple across hedge fund performance.