Hedge funds delivered their strongest annual return in 16 years, posting a 12.6% gain across all strategies in 2025, according to Hedge Fund Research. The performance eclipses the 2009 surge that followed the Global Financial Crisis, when funds surged nearly 20%. Stock‑picking and macro managers led the rally, each climbing more than 17%. Healthcare‑focused equity funds topped the list with a 33.8% rise, while energy and basic‑materials specialists added 23.4%, driven by drug‑pricing debates and a rebound in commodity prices. Citadel’s flagship Wellington fund climbed 10.2%, and AQR Capital’s Apex vehicle gained 19.6%. Only quantitative diversified funds slipped into negative territory, falling 0.65% after tariff volatility in April and a tech sell‑off in November.

The December HFR Fund‑Weighted Composite Index finished 1.56% higher, capping a year of robust gains. Investors watch how the sector‑specific momentum will translate into next‑year allocations as markets navigate post‑pandemic recovery and inflationary pressures. Analysts anticipate continued volatility.