(HedgeCo.Net) The hedge-fund industry continued its strong run through October, with many firms reporting gains and outperforming their own recent history. According to a report covering performance through the end of October, hedge-fund stock pickers achieved returns in excess of 13% year-to-date, outpacing many large multi-strategy peers. Reuters+2Finimize+2

Performance details

Specifically, funds that focus on stock-picking – long/short equity strategies – returned more than 13% in the first ten months of 2025, according to data cited by Reuters via a Goldman Sachs report. Reuters+1 However, when measured by monthly performance, the October return of about 1.75% for stock-pickers under-performed the S&P 500’s ~2.3% gain for the same month. Reuters

Macro and healthcare-led funds appear to be among the stronger contributors in recent months, helping keep the industry’s momentum alive. Hedgeweek
The hedge-fund sector clearly remains in solid shape after a period of skepticism, with gains coming despite concerns over slowing consumer spending and elevated market volatility.

What this means

The performance suggests that hedge funds are once again providing attractive alternatives for investors seeking active management and differentiated returns. The fact that many funds beat or matched double-digit gains is notable in an era when many long-only managers struggle.
On the flip side, the monthly under-performance relative to major indices signals that the easy gains may be behind us – and that managers will need to pick up pace (or move into new strategy areas) to continue to justify their fees.

Risks ahead

Even as the headline numbers look good, there are several caveats:

• A large portion of the return bar was set by a handful of successful trades; many funds trail the top performers.
• With elevated valuations and fewer large upside opportunities in public markets, hedge funds may need to shift tactics.
• Liquidity constraints, macro-headwinds (such as inflation, rate hikes, consumer weakness) and rising competition from passive strategies could erode future returns.

Bottom line

October’s results underscore that hedge funds remain relevant and effective for certain investor mandates. But the environment is changing: delivering double-digit gains is becoming more challenging, and firms will need to adapt either through deeper sourcing, strategy innovation or sector rotation to maintain traction into 2026.