Macro Suffers as Hedge Funds Survive April Chaos

Although currency managers were a rare bright spot in the sector, Macro hedge funds suffered amidst April’s volatility in markets, taking the shine off decent hedge fund performance elsewhere, according to indexation and analytics firm HFR.

The HFRI Fund Weighted Composite Index was -0.5% in April, according to HFR, bringing year-to-date returns to -0.92%. Within this, however, HFRI Macro (Total) Index dropped 2.69%, dropping the strategy into the red for the year at -2.61%. Commodity funds led losses, with the Commodity Index dropping 4.83%, there were also struggles for Trend Followers, with the Trend Following Directional Index dropping 3.33%. Year-to-date, the two strategies are -5.94% and -4.63% respectively.

As noted, there was better news from currency hedge funds, the Currency Index rising 0.9%, for 1.89% year-to-date, the Cryptocurrency Index also rebounded to recoup its March loss of 6.3%.

Continuing a theme of 2025, systematic finds continue to struggle badly, while their discretionary brethren thrive in the prevailing market conditions. The HFRI Macro: Systematic Diversified Index fell 3.98% in April, to bring year-to-date performance to -6.89%, this was almost matched by the HFRI Macro: Systematic Directional Index, which dropped 3.88% for year-to-date performance of -6.75%.

In contrast, the HFRI Macro: Discretionary Thematic Index rose 1.36% in April and continues to thrive at +6.71% year-to-date. The Discretionary Direction Index also rose, by 0.7%, to bring 2025 performance to +5.43%.

Overall performance was helped by a 0.66% return for the Equity Hedge (Total) index (-0.88% year-to-date), and the Fund of Funds Composite Index at +0.36% (-0.08%). The HFRI Emerging Markets (Total) Index was also up by 0.49% (+2.95%), and the HFR Long Volatility Index was, unsurprisingly, up 1.75% in April for +4.07% year-to-date.

Performance dispersion expanded again in April, as the top decile of the HFRI FWC constituents advanced by an average of +7.2%, while the bottom decile fell by an average of -10.2%, representing a top/bottom dispersion of 17.4%. In March this was 15.4%, and in the trailing 12 months ending April 2025, it was 53.5%. Approximately half of hedge funds produced positive performance in April, HFR says.

“Hedge funds again navigated historic and violent equity market volatility driven by trade, tariff and economic uncertainty in April, but unlike the March volatility, April also included a stunning and extreme intra-month reversal of investor risk sentiment contributing to unprecedented dislocations across equity and fixed income markets and extreme levels of realized volatility,” says Kenneth Heinz, president of HFR. “Through this market turmoil, hedge funds generated mixed performance for the month, with gains across Equity Hedge (concentrated in Growth exposures), sophisticated multi-manager/pod shops, and Long Volatility strategies which include option-based tail risk strategies engineered to generate gains in infrequent, low statistical probability financial markets events.

“While financial markets traded in a historic extreme range in April, recovering much of the steep declines by month end, hedge funds continue to position for the uncertainty associated with the implementation of new trade policies and economic uncertainty associated with these changes,” he continues. “Sophisticated institutional investors are likely to increase allocations and exposures to hedge fund strategies, including long volatility and pod shops, which have demonstrated their robustness and veracity through these recent historic market cycles, with these offering integral portfolio positive optionality and defensive, negatively correlated gains through the current market cycle of uncertainty and risk.”