Macro Funds End 2025 Strongly as Hedge Funds Thrive

Hedge fund performance hit a 19-year high in 2025 according to indexation and analytical firm HFR, thanks to an almost-universally strong end to the year across the industry.

The HFRI Fund Weighted Composite Index rose 1.56% in December, bringing the annual return to +12.64%, the best since 2009. The firm’s Equity Hedge (+17.34%) and Event Driven (+11%) indices led the way, followed by Relative Value (+7.49%) and Macro (+7.16%). The latter finished on a strong note, after suffering earlier in the year amidst heightened volatility, by being best performer in December at +1.87%.

Continuing a theme seen elsewhere, discretionary traders far outperformed their systematic brethren – indeed the best performing Macro sub-index was the Discretionary Thematic Index, which returned 17.28% on the year. The HFRI Discretionary Directional Index returned +15.75% in 2025, while the systematic equivalent failed to get its head above water, in spite of a +1.46% return in December, ending the year -0.68%.

Currency traders also recovered from earlier struggles, although the HFRI Currency Index was flat in December, for the year the index was +2.78%, only underperformed by two systematic traders’ indices. Third best Macro sub-index was the HFRI Multi-Strategy Index at +13.45%, next up was the Commodity Index, at +12.94%. The Cryptocurrency Index dropped 3.8% in December, but remained comfortably up at +8.09% on the year.

Performance dispersion remained steady in December, as the top decile of the HFRI FWC constituents advanced by an average of +8.9%, while the bottom decile fell by an average of -3.8%. This represents a top/bottom dispersion of 12.7% for the month, in November it was 12.6%. For the year, the top decile of FWC constituents gained +62.7%, while the bottom decile declined by an average of -12.8%, representing a top/bottom dispersion of 75.5%. Approximately three-quarters of hedge funds produced positive performance in December, HFR says.

“Hedge funds posted the strongest calendar year of performance since 2009, led by broad-based gains across all strategies and driven by strong momentum in AI technology investment, spending and infrastructure build – a dominant, powerful trend which has accelerated into 2026,” says Kenneth Heinz, president of HFR. “In addition to this powerful risk-on sentiment, hedge funds also navigated volatile and complex risk-off market cycles throughout the year, including the Liberation Day historic volatility spike, a sharp correction in the cryptocurrency market, and reversals of AI sentiment driven by concerns about valuation and sustainability of AI investment and spending.

“Through these oscillating cycles of risk-on and risk-off sentiment, hedge funds generated strong performance with significant contributions from a wide range of exposures and strategies throughout the year, including Healthcare, Technology, Convertible Arbitrage, Discretionary Macro, Commodities, Systematic Quantitative, Shareholder Activist and Energy sub-strategies,” he adds. “The impact of these diverse engines of performance highlights the sophisticated nature of the modern hedge fund industry to deliver uncorrelated performance gains across a wide range of financial market environments.

“Institutions and individual investors looking for access to these important exposures are likely to accelerate industry capital growth to historic records in 2026,” Heinz concludes.