Hedge funds delivered mixed results in April, with equity hedge strategies leading the way as they navigated a month marked by historic market volatility and sharp swings in investor sentiment, according to data from Hedge Fund Research (HFR).
The HFRI Equity Hedge (Total) Index recorded a +0.7% return for the month, supported by strong performance in healthcare and technology-focused funds. Meanwhile, the newly launched HFRI Long Volatility Index, tracking long vol and tail-risk strategies, surged +1.6% in its debut month as volatility spiked on tariff and trade concerns.
In contrast, macro strategies were hit hardest, with the HFRI Macro (Total) Index dropping -2.7%, weighed down by losses in commodity and trend-following CTAs. The HFRI Fund Weighted Composite Index declined -0.5% overall.
“Unlike March’s volatility, April brought a violent intra-month reversal of risk sentiment,” said Kenneth Heinz, President of HFR. “Despite the extreme swings, hedge funds posted gains in select equity and volatility-linked strategies while positioning for further macroeconomic uncertainty.”
Among equity hedge sub-strategies, healthcare and technology managers outperformed, with the HFRI EH: Healthcare Index rising +2.0% and the HFRI EH: Technology Index up +1.7%. Multi-strategy, market neutral, and fundamental growth-focused funds also posted positive results.
Event-driven strategies faced a tougher environment, with the HFRI Event-Driven (Total) Index slipping -0.4%. Losses in activist (-3.6%) and distressed (-1.25%) strategies were partially offset by gains in special situations (+1.45%) and merger arbitrage (+0.2%).
Relative value strategies also struggled, declining -0.9% for the month, driven by a -4.2% drop in volatility arbitrage funds. Convertible and asset-backed strategies posted smaller losses of -0.7% each.
Macro funds were broadly hit by sharp reversals in commodities and fixed income. The HFRI Macro: Commodity Index fell -4.8%, while the Systematic Diversified/CTA Index lost -4.0%. However, fundamental discretionary macro managers outperformed, with the Discretionary Thematic Index rising +1.4%.
Cryptocurrency strategies staged a strong rebound, with the HFR Cryptocurrency Index climbing +6.3% in April after falling the same amount in March. The newly launched HFR Cryptocurrency-Quantitative Index gained +9.8%.
Meanwhile, the HFRI Multi-Manager/Pod Shop Index added +0.3%, reflecting modest gains by large, multi-PM platforms amid the volatile environment.
Performance dispersion widened, with the top decile of funds gaining an average of +7.2% in April, while the bottom decile lost -10.2%. Over the trailing 12 months, that dispersion reached 53.5%.
“Institutional allocators are likely to increase exposure to hedge fund strategies that have demonstrated resilience, particularly long volatility and pod shops,” said Heinz. “These strategies offer valuable portfolio protection and defensive characteristics amid an ongoing cycle of macro and policy uncertainty.”
