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In February, global financial markets delivered mixed performance as volatility increased into month-end, with the spike accelerating into early March. The rise in volatility was driven primarily by weakness in technology companies whose business and revenue models faced pressure from continued AI development and investment. Market uncertainty was further amplified by tensions surrounding the U.S.–Iran military conflict, which intensified into March. Large-cap and Technology equities declined during the month, while small-cap stocks and emerging markets generally posted gains. Interest rates fell amid equity weakness despite persistent inflation pressures, while the U.S. dollar strengthened. Commodities were mixed, with Oil and metals surging, while Natural Gas declined.

Hedge funds posted gains led by Macro strategies, with the HFRX Global Hedge Fund Index gaining +0.44%.

HFRX Macro/CTA Index gained +1.36% for the month from gains in systematic trend-following managers. The HFRX Macro Systematic/CTA Index gained +2.10% as the U.S. dollar gained on most major currencies. Commodities posted mixed performance, with gains led by metals, and natural gas leading declines.

HFRX Equity Hedge Index gained +0.82% in February from gains in fundamental growth and value offset by declines in market neutral strategies. The HFRX Fundamental Growth Index gained +1.12% from gains concentrated in small-cap US and European equities. The HFRX Fundamental Value Index gained +0.81% from gains in exposure to large-cap US and European equities. The HFRX Equity Market Neutral Index declined -0.73% from declines in mean reverting, factor-based strategies.

HFRX Relative Value Arbitrage Index gained +0.08% for the month from gains in multi-strategy managers partially offset by declines in convertible arbitrage strategies. The HFRX RV: Multi-Strategy Index gained +0.10% as interest rates fell. The HFRX Convertible Arbitrage Index declined -0.14% as volatility rose in February.

HFRX Event Driven Index declined -0.13% in February from declines in special situations managers and merger arbitrage strategies. The HFRX Special Situations Index declined -0.10% from declines in exposure to global, catalyst-driven fundamental value equities. The HFRX Merger Arbitrage Index declined -0.54% as M&A deals continued through February and global equities posted a mixed performance.

Comments reference performance figures as of February 27, 2026