Currency Traders Drive Macro Returns as Hedge Funds Extend Gains

Hedge funds extended performance gains according to indexation and analysis firm HFR, with the HFRI Fund Weighted Composite (FWC) Index seeing a six successive monthly gain, driven by Macro funds, which in turn were led by currency traders.

The headline HFRI FWC Index was up 0.74%, bringing year-to-date returns to 10.31%, the Asset Weighted Composite Index slightly outperformed on the month at +0.85%, but lags slightly year-to-date at +8.37%. Within this, the HFRI Macro (Total) Index rose 1.02%, hitting +4.47% on the year, with Currency Index performing strongly at +2.82%, bringing it back to the black for the year at +1.88%. Active traders also did well, that sub-index was +1.89% (for +5.38% year-to-date).

The best performing Macro sub-index at HFR continues to be the Discretionary Thematic Index at +15.1% (it was +0.61% in October), followed by the Discretionary Directional Index at +13.7% (+0.76%). In contrast reflecting the struggles in the sector earlier this year, the two worst performers within the Macro family of indices are the Systematic Diversified and Directional indices at -2.37% and -2.44% respectively – both had a good October, however, at +1.2% and +1.27% respectively.

The HFRI Long Volatility Index rose 1.33% in October while the HFRI Multi-Manager/Pod Shop Index added 0.62%, with positive contributions from all main strategy exposures. Year-to-date they are +5.12% and +7.63% respectively.

Performance dispersion declined slightly in October, as the top decile of the HFRI FWC constituents advanced by an average of +7.7%, while the bottom decile fell by an average of -5.6%, representing a top/bottom dispersion of 13.3%. In September this was 13.9% and in the trailing 12 months it was 56.5%. HFR says approximately two-thirds of hedge funds produced positive performance in October.

“Hedge funds extended gains for the sixth consecutive month, the longest period of consecutive gains since 2021, with leadership from resurgent Macro strategies and by successfully navigating a more challenging market environment than in past months, including increased volatility and risk on/off tensions as a result of interest rate uncertainty and concerns relating to valuations of certain technology, and specifically AI-focused, exposures and positions,” says Kenneth Heinz, president of HFR. “While the constructive macroeconomic backdrop continues to evolve into 2026, broad industry performance saw significant contributions in October from uncorrelated Macro, fixed income based Relative Value and specialised Healthcare exposures, with the varied nature of these strategic contributions serving to reduce volatility and shift drivers from the core themes which have dominated recent financial market performance. It is likely that this expanded range of strategic performance drivers will accelerate through year end, not only broadening the opportunity set and increasing performance, but also reducing overall volatility.

“Institutions interested in access to these powerful, specialised performance and risk sensitive trends are likely to increase allocations to leading managers, pushing industry capital to new records and significant growth milestones into 2026,” he concludes.