Hedge Fund Inflows at Decade Highs

Net asset inflows into hedge fund strategies surged in Q2 2025, registering the highest quarterly inflow for more than a decade, according to indexation and analysis firm HFR.

The firm’s latest Global Hedge Fund Industry Report shows that investors allocated a net $24.8 billion in Q2, the highest since Q2 2014, bringing H1 inflows to an estimated $37.3 billion – the highest since H1 2015.

Fund performance also added to total hedge fund capital, with HFR reporting this at $4.74 trillion, up more than $212 billion from Q1, thanks to a collective +4.74% return in the quarter. Credit and interest rate strategies attracted the largest net asset inflows at $7.7 billion, followed by Macro at $7.2 billion and Equity Hedge at $5.1 billion. The allocation to Macro came in spite of underperformance by the strategy – the HFR Macro (Total) Index fell 1.2% in the quarter.

Larger funds attracted most of the new assets, managers with greater than $5 billion experienced estimated inflows of $22.9 billion, while mid-sized firms managing between $1 and $5 billion saw estimated inflows of $1.77 billion, and firms managing less than $1 billion to begin the quarter experienced net inflows of just $0.15 billion. In the first half, the largest firms experienced estimated inflows of $29.9 billion, mid-sized firms saw estimated inflows of $3.2 billion, and smaller firms experienced inflows of $4.2 billion.

“Driven by strong performance after successfully navigating historic volatility in early Q2, the hedge fund industry experienced its strongest growth in over a decade, as investors allocated nearly $25 billion of net capital to an industry that just reached its seventh consecutive quarterly asset record level”, says Kenneth Heinz, president of HFR. “Both asset and performance gains were widespread across nearly every strategy, sub-strategy and cross section of exposure, as managers effectively demonstrated tactical flexibility by adapting their exposures to the dynamic environment driven by continuous adjustment to evolving policy trends and the impacts these continue to have on international trade, supply chains, technology infrastructure investment, energy/commodity markets and monetary policy, including inflation and interest rate expectations.

As we experienced in Q2 and H1, institutions are likely to continue expanding allocations to funds which have demonstrated their strategy’s ability to deliver strong, uncorrelated performance gains through the dislocation and disruptive market cycles of H1 2025,” he adds.