Global hedge funds entered 2025 in repair mode and, by mid-year, were breaking records. Industry assets climbed to an all-time high of $4.74tn in Q2 as investors added $37.3bn—the strongest first-half net inflows since 2015—helped by improving risk sentiment after spring volatility.
Performance was uneven but respectable. By July, the average fund was up ~4.5% YTD, with a modest 0.5% gain in July as event-driven led (+2.7%), and fixed-income arb and macro also positive. Systematic equity quants suffered a sharp mid-month drawdown but rebounded to finish –2% for July and ~+10% YTD; discretionary stock pickers were +7.8% YTD through July, according to Goldman Sachs.
Regionally, China snapped back into favor late summer: August saw the strongest hedge-fund inflows to Chinese equities since February, concentrated in onshore A-shares as indices rallied (Shanghai +12% in Q3 to date; CSI 300 +9% in August).
Macro & multi-strategy names posted mixed but stabilizing results; standouts included Rokos Capital at +13.7% YTD after a July gain, outpacing the industry’s ~4.8% through July.
On the policy front, a U.S. appeals court ordered the SEC to revisit cost–benefit analysis for its short-selling transparency rules—a partial win for hedge-fund trade groups and a development that could reshape reporting burdens into 2026.
Beyond public markets, allocators kept leaning into higher-yielding alternatives: private-credit fundraising remained brisk, exemplified by SeaTown’s $612m first close for its third fund in August.
The upshot: 2025’s first eight months were defined by record AUM, selective alpha (event-driven, parts of macro), and a renewed embrace of large-cap tech/AI—punctuated by brief quant turbulence and a late-summer pivot back to China. With risk appetite thawing and rules in flux, managers are positioning for a more opportunity-rich second half while keeping hedges tight.
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