Hedge funds began the second half of 2025 on a strong footing, extending their solid first-half gains. This positive performance was driven by renewed confidence in M&A activity, global trade negotiations, and an overall improvement in the economic outlook, which encouraged investors to take on more risk.

According to Hedgeweek, performance leaders were strategies focused on event-driven situations and equity. Event-driven funds, which often invest in undervalued companies and merger plays, saw a particularly strong surge. Similarly, equity-focused strategies performed well, boosted by gains in healthcare and technology sectors. Funds specializing in cryptocurrency also experienced a significant rally.

While some traditional macro strategies showed mixed results, the general trend indicates a widespread “risk-on” sentiment. The president of a major data provider noted that the performance in July continued a “powerful trend” from the previous quarter, fueled by institutional investment, record-high equity markets, and increased economic clarity. However, he cautioned that significant risks, including geopolitical and policy shifts, still remain. He concluded that forward-looking investors will likely continue to allocate capital to strategies that are positioned for market gains but also have the flexibility to adapt to unpredictable changes.

End Notes

Source: https://www.hedgeweek.com/hedge-funds-extend-gains-into-h2-2025-as-ma-trade-talks-and-tech-rally-drive-performance/