1Q 25 Hedge Fund Strategy Performance, Gross of Fees
- Industry Return: 1.7%
- Best Performing Fund Style: Emerging Markets 6.3%
- Worst Performing Fund Style: Event Driven -0.8%
Summary Commentary
Hedge Funds eked out modestly positive performance in 1Q25 with the mix of sub-strategy returns largely reversing the moves of the previous quarter. Emerging Market funds outperformed meaningfully as Chinese stocks surged, meanwhile Equity Long/Short and Event Driven delivered weak outcomes.
Hedge Funds experienced a sharp reversal in positioning over the course of the quarter. Funds came into the year with low conviction and modest views, but subsequently increased long US dollar, credit spread and equity bets in line with increased expectations of US growth from the new administration. Those views soon reversed as the policy mix from the new administration became clearer and by the end of the quarter funds had scaled back those views considerably, with a bullish view on gold one of the notable outliers.
By the end of the quarter funds were back to running some of their lowest conviction in the last couple decades as the significant increase in policy volatility likely drove reticence to take on significant bets.
You can read the full report (pages 1 – 10) with additional context and market commentary here.