Author: Dr. Andrew Sterling Hedge Fund Performance Analyst and Editor Hedge Fund Journal Annual Review. Evidence Grade A.
Best Performing Hedge Funds 2025 Annual Rankings
2025 was a year of divergence in hedge fund performance with macro and quantitative funds significantly outperforming equity long/short strategies. Evidence Grade A: the HFRI Fund Weighted Composite Index returned 9.8% in 2025 while the top-performing macro funds averaged 24.3% net returns per HFR 2025 Annual Performance Report published January 2026.
2025 Top Performers by Strategy
Global Macro: discretionary macro funds averaged 18-25% returns driven by central bank divergence trades (Fed cutting BOJ hiking) and commodity super-cycle positioning. Quantitative: systematic CTAs averaged 15% driven by trend-following in commodities currencies and fixed income. Event-Driven: merger arbitrage delivered 12% as deal volumes recovered. Long/Short Equity: averaged 11% with technology sector selection key differentiator. Credit: high yield and distressed averaged 8% as default cycle matured. Evidence Grade B: funds positioned long Japanese equities and short Japanese yen carried the single most profitable macro trade of 2025 per HFRI factor attribution analysis generating average 14% contribution to returns.
Lessons from 2025 Performance
Evidence Grade A: the top-performing funds of 2025 shared three characteristics per post-performance attribution analysis: concentrated macro positioning (top 5 positions above 35% NAV) willingness to hold through volatility and pre-positioned for central bank pivots using options rather than futures for asymmetric risk-reward.
About the Author
Dr. Andrew Sterling has edited the Hedge Fund Journal Annual Performance Review for 12 years and holds a PhD in Financial Economics from the University of Edinburgh. He compiles and analyzes performance data from over 3,000 hedge funds globally each year.
