Global markets are setting new highs even as geopolitical tensions and restrictive monetary policy persist, with alternative investment strategies posting strong gains alongside traditional equities, according to a report by Bloomberg.
The S&P 500 and Nasdaq 100 both closed the month at record levels, driven by strong earnings from large-cap technology companies and upbeat guidance from firms such as Apple. Risk appetite has broadened across asset classes, with credit spreads tightening to multi-year lows and retail participation increasing in derivatives and prediction markets.
Despite concerns around elevated oil prices, ongoing conflict involving Iran, and expectations that interest rates may remain higher for longer, investor sentiment has remained resilient. Markets are even beginning to price in the possibility of future rate hikes in 2027, reflecting a more complex macro outlook.
Hedge fund inflows have also accelerated, with the industry attracting $45bn in the first quarter – the strongest two-quarter period since 2007 – lifting total assets to a record $5.2 trillion, according to Hedge Fund Research. At the same time, systematic and trend-following strategies have delivered strong performance, with some quant-focused funds up around 10% year-to-date.
Commodity-trading adviser (CTA) strategies have been among the standout performers, benefiting from sharp moves in energy markets. Gains have been driven largely by long positions in crude oil and refined products amid geopolitical disruptions and shifting supply-demand dynamics.
Industry participants note that the simultaneous strength of both traditional equities and hedge fund strategies is unusual, as capital typically rotates between passive equity exposure and active alternative strategies depending on market conditions. This year, however, institutional investors including pension funds and sovereign wealth funds have been allocating to both.
Market dispersion and volatility have created favourable conditions for long/short equity and macro strategies. Structured approaches such as return-stacking funds and systematic momentum strategies have also delivered strong returns, reflecting broad-based opportunities across asset classes.
Fixed income markets have largely mirrored equities, with high-yield spreads tightening back below long-term averages despite ongoing geopolitical risks. Investors appear to be treating recent shocks as temporary rather than structural, focusing instead on earnings resilience and macro stability.
At the same time, part of the hedge fund inflows has been driven by a reassessment of private credit allocations, as institutional investors rotate capital amid renewed scrutiny of valuations and liquidity terms in that segment.
