Global Hedge Fund Battle Report: Long/Short Strategies Steal the Spotlight!

The 2025 financial markets continue the complex trends of recent years, with geopolitical conflicts, macroeconomic data swings, the rise of emerging tech, and traditional industry shifts intertwining, bringing significant uncertainty to global hedge fund performance.

 

With more than half the year gone, some hedge funds have ridden the waves to substantial gains, while others struggle amid market turbulence with lackluster results.  

 

From the year’s start, U.S. stocks faced frequent volatility due to uncertainty over President Donald Trump’s policies and tech stock fluctuations sparked by China’s AI startup DeepSeek. This market chaos became a tailwind for some hedge funds.

 

Bridgewater Associates’ macro flagship fund, Pure Alpha, gained 8.2% in January, outperforming major indices. Its success stemmed from precise allocations across stocks, bonds, currencies, and commodities, profiting from counter-cyclical moves as U.S. equities fell under trade policy and inflation pressures.

 

Insiders familiar with Bridgewater’s performance reveal that by mid-March, Pure Alpha II had risen 11.3% year-to-date. By March 28, its flagship Pure Alpha 18% volatility fund was up 8.7% in 2025, capitalizing on market swings from U.S. trade policy shifts. Since CEO Nir Bar Dea took over in 2023, limiting flagship fund size and boosting AI investments has paid off.  

 

Some long/short equity hedge funds focused on tech stocks also found profit amid their ups and downs. Driven by long positions in Roblox (RBLX.US), Wix (WIX.US), Uber Technologies (UBER.US), and Elastic (ESTC.US), SoMa Equity Partners rose 4.73% in January.

 

A Goldman Sachs prime brokerage report to clients shows fundamental stock-picking hedge funds averaged a 2.6% return in January—the best month since February 2024—while systematic equity funds averaged 2.71%.  

 

In February, the full emergence of China’s AI startup DeepSeek, with its new “AI large model computing paradigm,” deeply integrated into healthcare, finance, and other sectors, spurred growth in China’s semiconductor and SaaS software industries, igniting global investor enthusiasm for Chinese tech stocks.

The MSCI China Index surged nearly 12% in February, while the Hang Seng Tech Index, covering giants like Alibaba and Tencent, jumped nearly 30% since then. During this period, allocating to Chinese tech stocks was key for some hedge funds to outperform peers.

 

Funds like Triata, Viridian, Aspoon, Red Gate, and Keywise reaped outsized returns by betting on Chinese AI software firms, data center operators, and humanoid robot companies.  

 

For instance, insiders revealed a Chinese hedge fund posted a 39% return in February, largely from bullish bets on AI software and data center stocks. Viridian Asset Management’s CIO Pascal Guttieres disclosed a roughly 6% gain that month—the best since its successful August 2024 launch—profiting from participating in share placements of Hong Kong-listed firms like Hesai Technology, XtalPi, and Black Sesame Intelligent.  

 

Not all hedge funds thrived in this complex market, however. A Goldman report shows that in March’s tech-driven sell-off, stock-picking and multi-strategy funds lost about half their average annual gains. Trump’s tariff policies clouded the U.S. economic outlook, triggering steep declines in tech, media, and telecom stocks—sectors heavily held by hedge funds.

Year-to-date, tech is the second-worst-performing S&P 500 sector, down about 8%, just above non-essential consumer goods. Goldman notes hedge funds fell into crowded trades, with stock-picking funds’ average returns slipping from 1% year-to-date to a 1.4% loss in March, turning 2025 performance negative at -0.5%.  

 

Similarly, in March, Brevan Howard’s $11.7 billion Master Fund dropped 1% in the first week, bringing its year-to-date loss to 5.4%. DE Shaw & Co.’s macro-focused Oculus Fund fell 4.4% by March 7. Other heavyweights like Citadel, Point72, and Millennium posted rare losses in February, with highly leveraged “multi-strategy giants” forced into aggressive unwinding during the sell-off.  

 

With over half of 2025 in the books, global hedge fund performance is sharply divided. Those with keen macro insights, flexible strategies, and the ability to seize emerging trends—like AI opportunities—have delivered standout returns.

 

Meanwhile, funds relying on traditional paths, slow to react to market shifts, or trapped in crowded trades face performance setbacks. As global economic conditions and geopolitics evolve in the second half, the hedge fund industry’s performance landscape may see further shifts.