Hedge funds extended their winning streak in June, according to data from HFR, delivering a third consecutive month of positive returns as equity markets reached new highs, artificial intelligence-driven stocks continued to rally and event-driven managers benefited from an active corporate and IPO environment.
The HFRI Fund Weighted Composite Index (FWC) gained 0.4% during June. The result capped the industry’s strongest quarterly performance since the fourth quarter of 2020, with the index returning 6.55% in the second quarter and 7.6% for the first half of 2026 – its best start to a year since 2021.
Equity Hedge strategies led the gains, with the HFRI Equity Hedge Index rising 1.3% for the month. Healthcare was the standout sector, climbing 6.1%, while technology-focused managers added 4.4%. Technology funds have now returned 24.1% during the second quarter, reflecting continued investor enthusiasm for AI-related companies.
Multi-strategy equity hedge managers and equity market neutral funds also posted strong monthly gains of 2.5% and 2.2%, respectively, although energy-focused equity hedge strategies declined as falling oil prices weighed on the sector.
Event-driven funds also enjoyed a strong month, with the HFRI Event-Driven Index advancing 1.2%. Activist strategies led the category with a 2.0% gain, followed by distressed and restructuring managers, which returned 1.8%, while special situations funds added 1.6%. HFR attributed the sector’s performance in part to ongoing merger and acquisition activity and exposure to the highly anticipated SpaceX initial public offering.
Relative value strategies generated more modest gains, with the HFRI Relative Value Index rising 0.25%. Performance was led by fixed income yield alternative strategies, which advanced 1.8%, alongside sovereign fixed income relative value managers, which gained 0.5%.
Macro managers were the weakest-performing group during the month, with the HFRI Macro Index falling 1.5%. Commodity-focused strategies declined 3.4%, while systematic diversified CTA managers lost 1.4% as sharply lower energy prices created headwinds across the sector. Cryptocurrency-focused hedge funds also experienced a difficult month, with the HFR Cryptocurrency Index falling an estimated 13.1%.
Liquid alternative UCITS strategies also posted positive returns. The HFRX Market Directional Index rose 1.55%, while the HFRX Global Index gained 0.63%, supported primarily by equity hedge strategies.
Kenneth J Heinz, President of HFR, said hedge funds had continued to benefit from record equity markets, AI-driven investment themes and opportunities created by major IPO activity. However, he cautioned that the second half of the year could present a more challenging backdrop as managers contend with questions over AI valuations, geopolitical risks, supply chain disruptions, interest rate uncertainty and political developments.
The latest data also highlighted the wide dispersion of returns across the industry. The top-performing 10% of hedge funds gained an average of 8.1% during June, while the bottom decile lost 8.4%, producing a performance spread of 16.5 percentage points. Over the past 12 months, the best-performing decile has returned 77.3%, compared with an 8.8% decline for the weakest-performing funds.
Overall, approximately 55% of hedge funds generated positive returns during June, underscoring the industry’s continued ability to produce gains despite increasingly divergent market conditions.
