Equity, event-driven lift hedge funds in June

HFR data showed the HFRI Fund Weighted Composite Index rose 0.4% in June, marking a third consecutive monthly gain. The index returned 6.55% in the second quarter and 7.6% in the first half of 2026, the strongest start to a year since 2021.

Equity hedge strategies led monthly gains, with the HFRI Equity Hedge Index up 1.3% in June. Healthcare-focused managers advanced 6.1% and technology-focused equity funds gained 4.4% for the month. Technology strategies returned 24.1% in the second quarter amid continued investor interest in AI-related companies.

Within equity strategies, multi-strategy equity hedge managers rose 2.5% in June and equity market neutral funds increased 2.2%. Energy-focused equity hedge strategies declined as lower oil prices weighed on results.

Event-driven managers climbed 1.2% for the month, supported by active merger-and-acquisition activity and exposure to the anticipated SpaceX initial public offering. Activist strategies rose 2.0%, distressed and restructuring managers returned 1.8%, and special situations funds added 1.6%.

Relative value strategies produced smaller gains: the HFRI Relative Value Index increased 0.25%. Fixed income yield alternative managers gained 1.8% and sovereign fixed income relative value funds added 0.5%.

Macro strategies fell 1.5% in June. Commodity-focused managers dropped 3.4% and systematic diversified CTA managers declined 1.4% as lower energy prices pressured returns. Cryptocurrency-focused hedge funds registered an estimated 13.1% loss on the HFR Cryptocurrency Index.

Liquid alternative UCITS vehicles also posted gains. The HFRX Market Directional Index rose 1.55% and the HFRX Global Index gained 0.63%, largely driven by equity hedge exposures.

Return dispersion across the industry remained wide. The top-performing decile of hedge funds gained an average 8.1% in June, while the bottom decile lost 8.4%, a gap of 16.5 percentage points. Over the past 12 months the best-performing decile returned 77.3%, compared with an 8.8% decline for the weakest decile. About 55% of hedge funds recorded positive returns in June.

Kenneth J. Heinz, president of HFR, warned the second half of 2026 could be more challenging for managers, citing questions over AI valuations, geopolitical risks, supply-chain disruptions, interest-rate uncertainty and political developments.

Equity and event-driven strategies accounted for the bulk of gains in the first half of 2026, while macro, commodity and crypto-focused approaches posted losses.