"After a banner year in 2024, Goldman Sachs' February outlook report found "buoyant sentiment" among investors following "unequivocally one of the best years for the hedge fund industry in recent memory." More than 90% of allocators told the bank their hedge fund portfolios met or exceeded expectations - the highest share on record, Goldman said. Investors have rewarded that confidence with another strong year. Through November, hedge funds gained 10.8% in 2025, according to PivotalPath's composite index, putting the industry on pace to eclipse 2024."
"Several popular hedge fund strategies are exhibiting historically high correlations with the S&P 500, according to a "market risk alert" from industry data provider PivotalPath, which increases the risk of sharp losses in a broader market correction. "With markets at all-time highs and the economy potentially cooling significantly, elevated correlations may catch investors off guard in an equity sell-off," the report reads."
Hedge funds posted strong performance through November 2025, gaining 10.8% year-to-date and delivering positive returns across nearly every major strategy. Investors added substantial capital, with $74 billion of inflows through November and reported allocators' satisfaction at record levels after strong 2024 results. Hedge fund assets hit the $5 million mark at the end of September, according to industry watcher Hedge Fund Research. Several widely used strategies now show historically high correlations with the S&P 500, and AI-driven equity trends have increased exposure to market direction, raising the risk of sharp losses in a broader equity sell-off.
Read at Business Insider
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