The hedge fund industry, worth $5.7 trillion, is experiencing a tumultuous 2025 with fluctuating markets and geopolitical tensions. Initially driven by optimism from the Trump administration, concerns arose due to disruptive tariff policies. Despite notable criticism from prominent hedge fund managers, interest in long-short equity strategies has surged, particularly with the rise of artificial intelligence. The first quarter showed strong fundraising, and markets stabilized in June, drawing parallels to the recovery seen post-pandemic in early 2020. However, risks remain as tariff negotiations continue and further macroeconomic shocks are anticipated.
"Hedge funds have had an emotionally turbulent ride in 2025, starting the year with soaring interest from big investors and optimism for the incoming Donald Trump administration. That optimism did not last long, however, as the President's tariff policies disrupted global trade and sent markets into a frenzy."
"Meanwhile, choppy markets and the rise of artificial intelligence renewed interest in long-short equity managers, as hedge fund backers sought investors who can pick winners and losers in the new world order."
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