Equity long-short hedge funds are experiencing a notable resurgence in 2025, attracting $10bn in H1 net inflows – their first positive inflow period in nearly a decade – as volatile markets create stock-picking opportunities, according to a report by the Financial Times.
The report cites data from Hedge Fund Research as highlighting that the inflows reverse a long trend of redemptions that saw over $120bn withdrawn since 2016, as investors lost patience with underperformance and high fees. But this year’s macro turbulence – particularly market swings triggered by President Trump’s April “Liberation Day” tariff announcement – has played to the strengths of equity long-short strategies.
Top-performing managers like Chris Hohn’s TCI, John Armitage’s Egerton, and Kintbury Capital have generated returns exceeding 20% year-to-date. US-based managers including Lee Ainslie’s Maverick and Daniel Sundheim’s D1 Capital are also delivering, with gains of 14% and over 20%, respectively. Mala Gaonkar’s SurgoCap Partners, which focuses on tech, is up 17% after returning 33% in 2024.
Data from PivotalPath confirms the trend: equity long-short hedge funds returned 9.2% in the first half of 2025, including a 3.5% gain in June, making them one of the top-performing strategies in the industry this year.
Managers attribute the improved environment to a combination of higher interest rates, weaker correlations between stocks, and greater investor scrutiny of earnings.
The broadening of equity market performance is another tailwind. For the first time in years, equal-weighted indices are keeping pace with market-cap-weighted benchmarks like the S&P 500. In Europe, defence names like Rheinmetall and BAE Systems have led sector rotations that benefit bottom-up investors.
