Hedge Funds Up in June, Currency Struggles

While hedge funds generally performed well in June and completed a reversal of fortunes from Q1, currency managers continued to struggle – albeit slightly – according to indexation and analysis firm HFR, which says that approximately 80% of funds produced positive performance in June.

The broad-based HFRI Fund Weighted Index rose just short of 2.4% in June, the highest monthly gain since December 2023, to hit +3.9% for the first half of the year, thanks largely to strong performances from Equity Hedge and Event Driven strategies. HFR says these strategies also contributed to a 1.2% gain in its recently-launched Multi-Manager/Pod Shop Index – year-to-date the index is up 4.64%.

In the Macro world there were mixed results, with the HFR Macro (Total) Index rising 1.26% but remaining in the red for 2025 at -1.3%. Within this currency traders were at -0.15%, meaning they hold on to year-to-date gains, albeit just +0.17%.

Another theme of 2025 – discretionary fund outperformance – continued, with the HFR Discretionary Directional Index rising 2.15%, while the Systematic equivalent, while managing to break a run of down months, only rose 0.84%. Year-to-date, the Discretionary Directional Index is +7.7%, while the Systematic Directional index is -7.53%.

HFR says performance dispersion contracted in June, as the top decile of the HFRI FWC constituents advanced by an average of +10.0%, while the bottom decile fell by an average of -2.6%, representing a top/bottom dispersion of 12.6%. By comparison, the performance dispersion in May was 15.4%, and in the trailing 12 months it was 63.1%.

“Hedge funds posted strong gains to conclude the second quarter – the best two month gain since 2023 – accelerating with strong momentum through mid-year,” says Kenneth Heinz, president of HFR. “The robust Q2 performance occurred against a backdrop of dramatically shifting drivers that began clouded by policy uncertainty, geopolitical risk, trade/tariff volatility, all of which evolved into significant policy clarity over the quarter stemming from passage of legislation, reduced geopolitical uncertainty and improving economic outlook.

“Furthermore, hedge fund launches have increased while liquidations have fallen to historic lows with total industry assets at record highs, underscoring the strength and robustness of the value proposition for institutional investors,” he continues. “It is likely that this industry strength not only extends but accelerates into H2 and that, regardless of the prevailing volatility paradigm or investor risk sentiment, institutional investors will increase allocations to funds which have demonstrated success and veracity of their strategies in recent months.”