Investment hedge funds are experiencing their strongest monthly performance in more than ten years, recovering from market declines in March that were sparked by Middle East warfare, according to a new quarterly industry analysis from Goldman Sachs.
The investment bank’s latest report to clients reveals several notable findings about hedge fund performance:
Stock-picking funds that use both long and short investment strategies have climbed 7.7% through Tuesday of this month, marking their strongest monthly showing since Goldman began monitoring this data in early 2016.
For the year overall, these long-short equity funds have recorded approximately 6.7% in gains, with investment managers focusing on Asia and China markets showing the strongest results. Long positions generate profits when asset prices increase, while short positions make money when values fall.
Across all investment approaches, hedge funds averaged 1.6% gains during the first three months of the year, despite suffering a 1.8% decline in March when macro trading strategies faced significant losses amid market instability.
Throughout the March quarter, equity long-short hedge funds investing across multiple sectors received their largest capital inflows since 2022, supported by positive investor sentiment as fund allocators and limited partners continued backing money managers despite recent performance challenges.
During March’s market turbulence, hedge funds experienced only 35% of the losses seen in traditional portfolios balanced with 60% stocks and 40% bonds, performing well compared to standard industry measures.
The gap between winning and losing individual hedge funds widened in March to its highest level in three years, showing increased dispersion as market volatility intensified.
During the quarter, equity long-short funds achieved what traders call “alpha” returns – profits generated through skilled trading rather than general market increases. Market-neutral funds posted 10.3% gains, healthcare-focused funds surged 33.6%, and Asia-oriented funds climbed 28.1%.
