Hedge fund performance in 2025 shows why manager selection still matters

In 2025, hedge funds delivered one of their better “beta-plus” years of the past decade: strong enough to satisfy allocators, but still a step behind the booming public equity tape. Using one of the broadest, frequently cited industry gauges, the Barclay Hedge Fund Index finished 2025 up about 12.6% (net of fees, based on reporting funds). That stacks up well against most cash and bond outcomes, but it also highlights the central feature of the year: dispersion, manager and strategy selection mattered far more than simply being “in hedge funds.”

At the top end, large, brand-name platforms and macro specialists posted eye-catching gains. Bridgewater’s Pure Alpha rose roughly 33–34%, its strongest year in decades, benefiting from big swings across rates, FX, and geopolitics. D.E. Shaw’s Oculus gained about 28.2%, and its flagship Composite was up around 18.5%, as multi-strategy books monetized volatility and relative-value dislocations. Several other major multi-managers also produced solid double-digit numbers, Balyasny (~16.7%) and Point72 (~17.5%) among them.

Yet 2025 wasn’t universally a “pod shop wins” story. Two of the biggest names still made money but trailed the leaders, with Millennium up ~10.5% and Citadel’s Wellington ~10.2%, according to reporting cited by Reuters. In equity-focused hedge funds, results were similarly bifurcated: Pershing Square finished up ~20.9%, while certain smaller, concentrated long/short managers posted far larger gains, underscoring how single-manager equity risk could be rewarded when positioned correctly.

2025 was a genuinely “good” hedge fund year overall, mid-teens at the index level, with standout winners far above that, driven by equity strength, macro volatility, and wide cross-asset dispersion that rewarded flexible risk-taking and penalized crowded, stop-and-reverse positioning.