Hedge funds posted strong gains in September, extending a five-month streak of positive performance, driven by macro and quantitative trend-following CTA strategies, according to the latest data from hedge fund index and analysis specialist HFR.
The HFRI Fund Weighted Composite Index (FWC) advanced an estimated 2.4% in September, while the Asset Weighted Composite Index rose 2.7%, boosting third-quarter returns to 5.7%, the strongest quarterly performance since Q1 2021. Systematic and uncorrelated Macro strategies led the charge, with the HFRI Macro (Total) Index up 3.4% and the HFRI Macro: Systematic Diversified Index jumping 4.5%.
Quantitative trend-following CTAs delivered their best monthly gains since February 2024, supported by broad asset-class moves in commodities, metals, and interest rates.
Equity Hedge funds gained 2.6%, led by Healthcare (+6.9%), Energy/Basic Materials (+6.4%), and Multi-Strategy (+4.7%) sub-strategies, with the total HFRI EH Index up 13.6% year-to-date. Fixed income-based Relative Value strategies advanced 1.3%, as bond yields fell amid expectations for further Federal Reserve rate cuts. Event-Driven strategies added 1.2%, supported by ongoing M&A activity and record corporate investment in AI.
Cryptocurrencies also contributed to gains, with the HFR Cryptocurrency Index up 6.7% in September. Liquid alternative UCITS funds mirrored the trend, with the HFRX Market Directional Index rising 2.6% and the HFRX Macro/CTA Index jumping 3.5%.
“Recent record performance gains on top of the record levels of global institutional capital invested in hedge funds has continued driving strong portfolio performance for an increasing range of institutional investors, including pension and sovereign wealth funds, family offices, as well as retail and individual investors,” said Kenneth J Heinz, President of HFR. “These record gains across the broad range of hedge fund strategies have contributed strongly to investor portfolio performance through the current risk on cycle but are also likely to reduce downside risk and volatility, with these also expected to drive record industry capital growth through year-end and into 2026.”
