The best record in 16 years! Global hedge funds made a profit of 12.6% in 2025, with stocks and macro strategies making the most money.

Due to the traditionally high fees of hedge funds, their actual performance does not always match their marketing. However, in 2025, the industry achieved its best performance since the global financial crisis. The industry's global performance gauge, the HFR index, showed a 12.6% return last year, the strongest annual performance since the global financial crisis in 2009. Chicago-based industry tracker Hedge Fund Research (HFR) reported that its HFRI Fund Weighted Composite Index (FWC) rose by 1.6% in December, with a projected increase of 12.6% for 2025, the highest level since 2009. HFR noted that the increase in December was led by macro-commodity, trend-tracking, and energy fund strategies. The hedge fund's 2025 returns were mainly driven by long and short stock market stock selection strategies, as well as macro funds that trade macroeconomic themes using stocks, bonds, commodities, and currencies. According to the latest data released by HFR, both of these strategies saw gains of over 17% this year. Supporters of hedge funds argue that the $4.98 trillion industry (as of the end of September 2025) has proven its ability to diversify investor portfolios amidst market volatility caused by geopolitical changes and uncertainty in macroeconomic policy trends. Kenneth J. Heinz, President of HFR, stated in a declaration about the report, "The impact of these diversified performance engines highlights the complexity of the modern hedge fund industry, enabling it to achieve uncorrelated performance growth in a broad financial market environment. In the cyclical fluctuations of risk preference and risk aversion sentiment, hedge funds have delivered robust gains throughout the year, driven by significant contributions from a variety of investments and strategies, including healthcare, technology, convertible arbitrage, autonomous macro strategies, commodities, systematic quantitative strategies, shareholder activism strategies, and energy sub-strategies." Heinz emphasized that in 2025, AI, technology, and infrastructure spending drove the stock market to thrive. He added that the hedge fund industry successfully navigated through "cyclical fluctuations of risk preference and risk aversion sentiment," such as turbulence caused by tariff announcements on "Liberation Day," cryptocurrency devaluation, and tech stock reversals due to valuation concerns. Equity hedge funds (EH funds) led the pack in strategy performance in 2025. These funds made long and short investments in specific sub-strategies, with notable performances in healthcare, energy, and diversified strategy sub-strategies. The HFRI Equity Hedge Index rose by 1.8% in December, achieving a total of 17.3% for the year 2025, marking the largest annual increase for the index since 2020 and the second largest since 2009. Healthcare, energy, and commodities markets provided investors with lucrative returns, as industry-specific strategies successfully capitalized on themes driving pharmaceutical stock increases like drug pricing and weight loss, as well as the continuous rise in gold and silver. According to HFR data, equity hedge funds focused on healthcare saw a 33.8% increase last year, while those focused on energy and materials saw a 23.4% increase. The HFRI Macro Total Index rose by 1.9% in December, marking seven consecutive months of gains, with a cumulative increase of 9.9% during this period. Driven by strong expectations for the 2026 merger environment, Event-Driven (ED) strategies (which typically focus on undervalued deep-value stocks and speculation on mergers) also saw increases in December. The HFRI Event-Driven Total Index rose by 1.5% in December, achieving an 11% increase for the full year, the highest increase since 2021. Only one strategy type ended with a loss. Quantitative diversified funds - computer strategies that use statistical algorithms and models instead of human traders for market investments - experienced a 0.65% decline at the end of 2025, impacted by heightened volatility during the tariff announcement period in April and the tech stock sell-off in November.