Currency Funds Strong, Macro Subdued in Latest Hedge Fund Data

While the hedge fund industry generally had a decent August, Macro funds continued with their subdued performance, notwithstanding a month-best return from currency funds, according to analytics and data firm HFR.

The HFRI Fund Weighted Composite Index rose 0.67% in August, bringing year-to-date returns to +3.89%. August performance was led by Event-Driven funds, the HFRI Event-Driven (Total) Index rising an estimated 1.5%, closely followed by the Equity Hedge (Total) Index at +1.33%. Year-to-date, the latter has outperformed the former +7.37% to +5.88%.

Macro funds continued to struggle to generate any real returns, although the HFRI Macro (Total) Index did eke out an estimated 0.05% gain in August. Year-to-date the index remains in the red at -1.17%, largely thanks to the woes of systematic funds earlier in the year. For the second month in a row, the HFRI Macro: Systematic Directional Index outperformed its discretionary peer (+0.4% and -0.21% respectively), however year-to-date it remains a tale of misery for the former at -7.5% compared to +7.15% from the discretionary index.

Best Macro sub-index performance came from currency funds, with the HFRI Macro: Currency Index adding 1.84%, dragging the index into the black for the year at +1.49%, however it remains being the Multi-Strategy Index at+3.01% for the year – this in spite of a drop of 1.01% in August.

The HFRI Trend Following Index fell 0.21% in August and remains mired in the red at -4.57% year-to-date. There was better news for the Active Trading Index at +1.34%, for +1.05% year-to-date.

The HFRI Multi-Manager/Pod Shop Index rose 0.07% in August, bring year-to-date performance to +4.38%, while, responding to continued strength in prices, the HFR Cryptocurrency Index surged 10.49%, but remains down for the year at -2.02%.

Performance dispersion contracted in July, as the top decile of the HFRI FWC constituents advanced by an average of +6.7%, while the bottom decile fell by an average of -4.6%, representing a top/bottom dispersion of 11.3%. By comparison, the top/bottom performance dispersion in June was 12.3% and in the trailing 12 months ending July 2025, it was 58.5 %. HFR says approximately 70% of hedge funds produced positive performance in July.

“Hedge funds posted a strong start to the second half of the year, accelerating the powerful performance trend to conclude the second quarter, and building on strong institutional demand and asset growth in the first half,” says Kenneth Heinz, president of HFR. “July gains were extended across nearly all strategies – crypto, event driven, equities, activist, fixed income, multi-strategy/pod shops – with these benefitting from increased and near-term clarity on trade/tariff negotiations, expectations for interest rate reductions, and an improved global economic outlook into the second half.

“With equity markets at record highs, while risk-on sentiment has dominated the past two-and-a-half months supporting gains across both hedge funds and long biased benchmarks, significant risks remain in an evolved capacity, with the potential for reversals and volatility as geopolitical policy changes are discounted into global financial markets,” he continues. “Forward looking institutional investors are likely to accelerate the capital growth trend from the first half of the year by allocating to strategies opportunistically positioned to participate in additional market gains but also maintaining the tactical flexibility to quickly react to dynamic and unpredictable changes which are likely to occur in the current financial market paradigm.”