(HedgeCo.Net) Global hedge funds have pulled in $37.3 billion in new capital during the first half of 2025, making it the strongest first half for inflows since 2015, according to data from HFR. Reuters
Investors have flocked to hedge funds in search of uncorrelated returns amid macro uncertainty, trade tensions, and central bank signaling. While equity markets overall delivered solid gains (S&P 500 up ~5.5%), many allocators viewed hedge funds as valuable diversifiers in turbulent times. Reuters

Performance has been mixed but encouraging: the average hedge fund returned ~3.88% in the first half, while certain funds posted double-digit gains. Bridgewater’s flagship strategy gained around 17%, Rokos Capital delivered ~12.26%, and Caxton Associates was up ~14%. Reuters
These returns, coupled with capital inflows, lifted total industry assets to $4.74 trillion by mid-2025. Reuters

However, not all trends are bullish. Some institutional investors are rethinking their allocations. For example, the University of California’s $190 billion endowment has decided to divest from hedge funds, citing underperformance in crises and high fees. The fund’s CIO remarked, “Hedge funds … exposed us to the opposite kind of risk, which actually meant they hurt us.” Financial Times

Still, the broader story is clear: capital is flowing into hedge fund strategies at a pace not seen in a decade. Despite headwinds, many allocators believe that credit dislocations, macro divergence, and geopolitical rotation make active alternative strategies more attractive. As volatility remains elevated, the question is whether hedge funds can maintain the outflows to match investor expectations.