Equity, event-driven gains lift hedge funds in June

Hedge funds rose 0.4% in June, data from HFR show. The HFRI Fund Weighted Composite Index gained 0.4% for the month, returned 6.55% in the second quarter and 7.6% for the first half of 2026, marking the strongest quarterly result since Q4 2020 and the best first half since 2021.

Equity hedge strategies led monthly gains, with the HFRI Equity Hedge Index up 1.3% in June. Healthcare-focused managers climbed 6.1%, while technology-focused managers added 4.4% for the month. Technology-focused funds rose 24.1% in the second quarter amid continued investor demand for AI-linked companies.

Multi-strategy equity hedge managers advanced 2.5% and equity market neutral funds gained 2.2%. Energy-focused equity hedge strategies declined as lower oil prices weighed on returns. Event-driven funds increased 1.2% in June; activist strategies gained 2.0%, distressed and restructuring managers returned 1.8%, and special situations funds added 1.6%. HFR noted that exposure to the anticipated SpaceX initial public offering was one factor supporting event-driven returns.

Relative value strategies produced modest gains, with the HFRI Relative Value Index up 0.25%. Fixed income yield-alternative managers rose 1.8% and sovereign fixed income relative value managers gained 0.5%. Macro managers were the weakest group, with the HFRI Macro Index down 1.5% for the month. Commodity-focused strategies fell 3.4%, systematic diversified CTA managers declined 1.4% largely due to steep energy price moves, and the HFR Cryptocurrency Index is estimated to have lost 13.1%.

Liquid alternative UCITS funds posted gains. The HFRX Market Directional Index rose 1.55% and the HFRX Global Index gained 0.63%, supported mainly by equity hedge exposures.

Kenneth J. Heinz, president of HFR, cautioned: “Managers will face questions over AI valuations, geopolitical risks, supply chain disruptions, interest rate uncertainty and political developments in the second half.”

Returns varied widely across managers. The top-performing 10% of hedge funds gained an average 8.1% in June, while the bottom decile lost 8.4%, a 16.5 percentage-point spread. Over the past 12 months the top decile returned 77.3% and the weakest-performing decile fell 8.8%. Approximately 55% of hedge funds generated positive returns in June.