​The hedge fund industry has entered a period of renewed strength, supported by a powerful combination of rising assets, substantial inflows and solid performance across several core strategies. Global industry assets have climbed to almost five trillion dollars by the third quarter of 2025 according to HFR, marking the eighth consecutive quarterly increase and the strongest accumulation of capital since before the global financial crisis. Inflows have been driven by a clear shift in allocator behaviour. Investors have been repositioning portfolios to cope with conflicting macro signals, ranging from uneven global growth and persistent policy divergence between major central banks to elevated bond market volatility and ongoing geopolitical tensions. With the traditional balance between equities and bonds failing to provide reliable protection in this environment, institutions have been turning to hedge funds as a source of active risk management and diversification.

​Gold has risen sharply in recent weeks, climbing past $4,000 per ounce and gaining more than 50% since the start of the year, as shown in Figure 1. The rally accelerated after September as investors reacted to a mix of geopolitical and macroeconomic developments. Prices surged as tensions in the Middle East intensified, driving safe-haven demand, but gold briefly lost momentum once a peace deal was reached, reducing immediate global uncertainty. However, expectations of imminent interest rate cuts and renewed tensions between the United States and China over rare earth minerals and retaliatory tariffs quickly offset that effect. Strong central bank purchases, continued ETF inflows, and a softer dollar have added further support, pushing gold to record levels and making it one of the top-performing assets of 2025 so far.

​According to Hedge Fund Research (HFR), the global hedge fund industry’s assets under management (AuM) surged to a record $4.74 trillion at the end of Q2 2025, the highest level ever recorded. The quarter was marked by the strongest capital inflows in more than a decade, with $24.8 billion added in Q2 alone and $37.3 billion for the first half—making it the best H1 result since 2015. Performance-based gains contributed an additional $188 billion in Q2, the largest return-on-risk advance since early 2021, underscoring the sector’s strong rebound. By strategy, Equity Hedge and Event-Driven funds each surpassed $1.3 trillion in assets, while Relative Value Arbitrage climbed to $1.28 trillion, highlighting both broad investor demand and differentiated opportunity sets within the industry. As shown in Figure 1, hedge funds have return steady returns across nearly all strategies. Our Equity hedge funds returned above 10% compared to 6.8% of comparable benchmarks. Similarly, our Cryptocurrency hedge funds outperformed the benchmark by nearly 4% with YTD of 6.5%. Fixed Income strategies yielded steady 5-6% with comparable results for Fund of Hedge Funds. Only Tactical Trading strategies faced a difficult year with an ever-changing financial environment.

In the United States, macroeconomic momentum has shown signs of cooling as weaker labour market data, including sharp downward revisions to prior employment figures, have raised questions about the underlying strength of the recovery. Inflation, while still above the Federal Reserve’s long-term target, has moderated to levels increasingly seen as “acceptable” for policymakers. Against this backdrop, attention turns to next week’s FOMC meeting, where markets are broadly pricing in a 25bps rate cut. This adjustment is viewed as a pre-emptive move to support growth while ensuring that inflation expectations remain anchored. Investors will also be watching for signals on the Fed’s forward guidance, particularly how it balances cooling labour dynamics with the political scrutiny it faces over its independence.
Across the Atlantic, the European Central Bank opted to keep policy rates unchanged at its September meeting. The decision reflects both a more benign inflation trajectory and upgraded growth expectations for 2025, which provided policymakers with breathing space. However, despite the near-term pause, markets still anticipate further cuts later in the year as the ECB seeks to sustain momentum while navigating external headwinds from trade disruptions and global demand softness. Yet two of Europe’s largest economies have become sources of concern. In France, political instability and fiscal unease have driven sovereign yields sharply higher, to the point where some large corporates now borrow more cheaply than the state itself. Meanwhile, in the United Kingdom, gilt yields have surged to levels not seen in nearly three decades, intensifying scrutiny on the government’s fiscal stance and prompting calls for the Bank of England to recalibrate its quantitative tightening programme.