Mixed July for Hedge Funds

Hedge fund performance rebounded in July, with many managers lifted by strong equity markets that pushed the S&P 500 to record highs, according to Reuters. However, not all strategies benefited equally, while discretionary managers capitalized on bullish trends, others faced setbacks due to market volatility and persistent trade uncertainty in the U.S.

Stock-picking hedge funds delivered solid results, gaining nearly 1.5% in July and bringing year-to-date performance to approximately 7.8%, according to Goldman’s note to clients. These gains were largely driven by continued momentum in already crowded trades. In contrast, systematic equity funds initially faced steep losses and were on track for their worst monthly performance on record, before recovering after July 25 to finish the month down 2%. Despite the drawdown, they remain up 10% year-to-date.

Among multi-strategy and market-neutral managers, results were more mixed. Citadel’s Wellington Fund posted a 1.3% return in July, bringing its 2025 performance to +4%. Marshall Wace’s flagship Market Neutral TOPS fund slipped 0.22%, though its year-to-date gain remains strong at +11%. Its Eureka fund performed better, returning +1.6% in July and +6.1% YTD.

At Schonfeld Strategic Advisors, the Strategic Partners Fund dipped 0.3% in July, up 5.8% for the year, while its Fundamental Equities strategy gained 1.4%, lifting its 2025 performance to 7.1%.

Meanwhile, Man Group strategies underperformed: the AHL Alpha Programme declined 1.48% in July, now down 9.14% YTD, while Strategies 1783 dropped 1.04%, though still positive at +5.01% for the year.

The divergence in returns highlights the continued challenge for systematic and quant managers amid shifting market dynamics, while discretionary funds have found success in familiar, high-conviction names. As hedge fund performance diverges across strategies, talent alignment and portfolio construction remain more important than ever.