In May 2025, hedge funds experienced a notable rebound, achieving an average global return of approximately 3%. This performance was primarily driven by a recovery in equity markets and strategic positioning amid ongoing market dislocations resulting from April's global trade disruptions. A weaker U.S. dollar also contributed positively to returns.
Strategy highlights
- Quantitative Equity Funds: These funds led the performance charts with a 4.2% gain, capitalizing on market volatility and dislocations.
- Stock-Picking Funds: Achieved a 3% return, benefiting from the equity market recovery and easing tariff concerns.
- Multi-Strategy Funds: Posted a 2.5% gain, reflecting diversified approaches across asset classes.
- Discretionary Global Macro Funds: Continued to attract investor interest, with returns of 7% through April, as investors sought strategies adept at navigating macroeconomic trends.
Despite overall positive performance, certain strategies faced headwinds.
- Fixed Income and Commodity Positions: Encountered challenges due to volatility and renewed concerns over sovereign debt levels in major economies.
- Systematic Funds: Struggled with heightened market uncertainty, necessitating frequent position adjustments to remain within risk limits.
The broader market environment in May was characterized by a recovery in stock markets amid easing tariff concerns. The S&P 500 surged by 6.2%, marking its best month since November 2023. This rally provided a favorable backdrop for equity-focused hedge fund strategies.
May 2025 marked a period of recovery and positive returns for hedge funds, particularly those with equity-focused and multi-strategy approaches. However, challenges persisted in fixed income and commodity markets, underscoring the importance of strategic diversification and adaptability in hedge fund management.
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