Global hedge fund assets under management climbed to an all-time high of $4.74tn in Q2 2025, fuelled by the largest quarterly inflows since 2014, as institutional investors poured nearly $25bn into the sector, according to the latest HFR Global Hedge Fund Industry Report.

Total capital rose by $212.7bn during the quarter, marking the seventh consecutive quarterly record, as hedge fund managers navigated volatile early-quarter conditions and capitalised on a shifting macro environment that included US budget legislation progress, easing geopolitical tensions, and a rosier second-half economic outlook.

H1 2025 inflows reached $37.3bn – the strongest first half since 2015 – boosted by robust performance across a range of strategies. The HFRI Fund Weighted Composite Index gained +4.3% in Q2, led by Equity Hedge (+7.6%) and Event-Driven (+5.3%) strategies. On a year-to-date basis, macro discretionary and Latin America-focused funds stood out with returns of +8.6% and +13.9%, respectively.

Equity hedge strategies saw assets grow by $90bn to $1.4tn, supported by $5.1bn in new capital and double-digit gains in fundamental growth sub-strategies.

Event-Ddriven strategies added $81.2bn in capital, including $4.7bn in net inflows, bringing total AUM to $1.34tn, while relative value arbitrage funds, benefiting from fixed income opportunities, grew by $36.5bn, with $7.7bn in inflows and continued consistent returns.

Macro strategies meanwhile, recorded a modest $5.3bn AUM increase, despite mixed performance and a decline in systematic macro approaches.

Investor allocations were concentrated in large managers, with firms managing more than $5bn taking in $22.9bn in Q2 alone. Smaller and mid-sized managers saw inflows of $1.77bn and $150m, respectively.

“The hedge fund industry experienced its strongest growth in over a decade,” said HFR President Kenneth J Heinz, citing tactical flexibility and strong adaptation to fast-moving macroeconomic and geopolitical trends. “Institutions are likely to continue expanding allocations to funds that have demonstrated an ability to deliver strong, uncorrelated returns during periods of market dislocation and disruption.”