Hedge Funds Deliver Best First-Half Performance Since 2013 on $70.4B in Inflows

H1 2026 Performance: Best First Half in 13 Years

The PivotalPath Composite Index returned 7.3% in the first six months of 2026, the eighth-best first half in the index's 29-year history and well above the historical first-half average of 5.15% . That nearly doubled the 4% return from H1 2025 and marked the strongest first half since 2013 .

The year started with broad-based gains: industry-wide returns reached approximately +4.3% by the end of February, with about 75% of funds profitable that month . Macro strategies were particularly strong early on, posting gains of roughly +4.15% in January and +3.0% in February .

June 2026: Third Consecutive Monthly Gain

Hedge funds recorded their third straight monthly gain in June, delivering a weighted average return of 2.4% . Global macro funds led the month with a 3.0% return, followed closely by equity strategies at 2.9% . Commodity-focused funds declined by 2.3%, while trend-following (CTA) funds edged slightly negative as gains in gold and silver were mostly offset by losses in crude oil, coffee, and the Australian dollar .

Stock-trading hedge funds finished June with double-digit year-to-date returns, aided by short bets in certain crowded sectors .

Capital Flows: $70.4B in H1, Record Industry AUM

Funds administered by Citco recorded $13.6 billion in net inflows during June alone, bringing the total for H1 2026 to $70.4 billion . Multi-strategy funds captured the majority of that capital, receiving $9.1 billion in June and $43.4 billion across the first half .

Looking at the broader industry picture, Q1 2026 saw $44.5 billion in net asset inflows and nearly $90 billion over the trailing two quarters — the strongest two-quarter inflow period since 2007 . Total industry capital hit a record $5.22 trillion in Q1 2026, the 14th consecutive quarterly gain . This followed a powerful 2025 when hedge funds gathered roughly $116 billion in net inflows, also the highest annual figure since 2007 .

Leading Strategies: Tech Specialists and Global Macro Dominate

For the full first half, technology specialists led gains, benefiting from the continued rally in semiconductor and AI-related stocks . Global macro was the strongest overall strategy category, posting standout returns while remaining the lowest-correlated to broader markets .

Equity long/short and event-driven strategies also delivered strong results. CastleKnight's event-driven fund led all individual funds with a 42.3% return through June, while Melqart Opportunities gained 29.1% . Asia-focused equity managers dominated performance tables, with TAL China Focus surging 95.1% . Notably, smaller specialist hedge funds broadly outperformed many of the largest multistrategy giants during H1 .

Leading Firms: Point72, Millennium, and Schonfeld

Among large-scale multistrategy managers, Point72 (Steve Cohen) returned 3.4% in June, pushing first-half returns to 14.5% . Millennium gained 4.1% in June, bringing its H1 return to 10.5%, while Schonfeld posted a 2.5% June gain and 8.4% for the half .

Market Backdrop: War, AI Rally, and Record IPO Activity

The hedge fund recovery unfolded against an unusually volatile macro environment that ultimately favored active managers:

• US-Iran conflict triggered a sharp global equity swoon in early 2026, with the S&P 500 declining about 8% in the weeks following the outbreak of war on February 28 . Oil briefly shot to $120 a barrel, and global stocks dropped $9 trillion in March . A ceasefire on April 8 sparked a rapid relief rally .
• AI boom continued relentlessly. The AI infrastructure build-out and semiconductor rally drove major equity gains, with global stocks rising roughly $7 trillion in H1 despite the geopolitical turmoil . The Nasdaq-100 and S&P 500 hit or approached record highs by end of H1, recovering sharply from the March lows — the Nasdaq rallied over 32% from its March low .
• Record IPO activity (including SpaceX) and elevated M&A further boosted event-driven and equity strategies .
• Regulators issued warnings about AI-related leverage and concentration risk, but this did not derail the rally . The IMF flagged elevated financial stability risks from the Middle East war, potential inflationary pressures, and tighter financial conditions .

In short, the combination of a resilient AI-led equity rally, de-escalating geopolitical risk after the initial Iran shock, strong corporate earnings, and record IPO/M&A activity created a favorable environment that drove both strong hedge fund returns and sustained investor inflows through the first half of 2026.