The first-half stock market slump caught hedge funds off-guard, but most long/short managers remain confident they can ride out the storm.

After years of rising markets, the current economic reversal has placed alpha generation firmly in focus after hedge funds were hit by the first-half global turmoil.

Pension funds and other institutional investors closely focused on protecting their portfolios and seeking out sources of potential return in Q2 2022, despite ongoing volatility, as both bond and equity markets plummeted.

Hedge funds attracted marginally positive flows from investors last month, as the industry notched up a 3% weighted average gain in July following a torrid first half for investment performance.

​​​​​​​An overwhelming majority of macro hedge funds and trend-following managers are upbeat on their performance prospects for the rest of the year – but confidence among equity-focused firms has plummeted following 2022’s stock market upheaval.

Following a challenging second quarter, the hedge fund industry came back fighting in July, advancing 2.89% for the month, according to the Barclay Hedge Fund Index, with much of the uplift coming on the back of a seemingly improbable surge

Performance dispersion among hedge funds has narrowed in recent weeks, as almost 60% of managers generated profits in July – with long/short equity, event driven and relative value strategies all making gains, according to new industry data.

Hedge funds’ capital-raising activities in Europe could be hindered by new rules impacting the pre-marketing process under changes to the EU’s Alternative Investment Fund Managers Directive, industry practitioners warn.

Listed interest rate derivatives and commodities futures and options have been identified as the best performing asset classes for proprietary trading firms in the first half of 2022 as fears of a recession and soaring inflation caused volatility across global