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Purchase The Q2 2026 Global Hedge Fund Industry Report

Industry capital increased by $409.3 billion in 2Q, the largest increase in history;

Quarterly performance-based gains of $364 billion also set new record

CHICAGO, (July 23, 2026) – Total global hedge fund industry capital exploded in 2Q with a historic surge to $5.6 trillion, jumping for the 15^th consecutive quarter, as reported in the latest HFR Global Hedge Fund Industry Report, released today by HFR®, the established global leader in indexation, analysis and research of the hedge fund industry.

While hedge fund managers continued to navigate ongoing geopolitical uncertainty driven by the Iran military conflict and associated issues, these were overwhelmed by the momentum and risk-on sentiment relating to AI and technology investment and a continuing record IPO cycle.

“The current environment is unequivocally the strongest for hedge fund capital growth since industry inception, considering not only the positive risk-on drivers of growth but also the backdrop of ongoing and shifting geopolitical and macroeconomic risks,” stated Kenneth J. Heinz, President of HFR. “The industry has effectively demonstrated the ability to navigate rapidly shifting risk-on and off sentiment, see-sawing market conditions, and intense dislocations driven by these forces.”

Records on Records

Industry capital grew by a historic $409.3 billion in 2Q – the largest quarterly asset increase in history, shattering the previous record of $290.4 billion in 4Q 2020 – driven by record performance gains of $364 billion and estimated quarterly net asset inflows of $45.2 billion, topping similar inflow levels of the past two quarters. The trailing three-quarter total of $134.4 billion of net asset inflows is the highest three-quarter period since 2007 and already tops the calendar year 2025 total of $115.8 billion in net inflows, which was the strongest calendar year of investor inflows since 2007. Total global hedge fund industry capital ended 2Q at a record $5.6 trillion.

Performance

Hedge funds posted strong industry-wide strategy gains in 1H26, led by the HFRI Equity Hedge (Total) Index, which jumped +9.6 percent, driven by strong contributions from the HFRI EH: Technology Index, which surged +19.0 percent over the first six months of the year. Driven by exposure to historic IPOs and accelerating M&A, the HFRI Event-Driven (Total) Index advanced +7.4 percent in 1H26, with sub-strategy leadership from the HFRI ED: Distressed Index, which jumped +12.4 percent.

The HFRI Macro (Total) Index returned +6.1 percent in the first half of the year, led by quantitative, trend-following CTA strategies, as the HFRI Macro: Systematic Diversified Index gained +9.7 percent.

The fixed income-based HFRI Relative Value (Total) Index added +3.7 percent in 1H26, led by the HFRI RV: FI-Yield Alternatives Index, which vaulted +16.3 percent.

The HFRI Fund Weighted Composite Index^®, which includes all strategies, posted the strongest 1H since 2021, gaining +7.5 percent.

Asset growth

Equity Hedge (EH) led industry capital strategy growth in 2Q26, with assets increasing by $173.0 billion over the prior quarter, including an estimated net asset inflow of $9.8 billion, to end 2Q at $1.76 trillion AUM. EH sub-strategy asset increases were led by Fundamental Value funds, with these increasing by $82.9 billion for the quarter, bringing the industry’s largest sub-strategy to a record $933 billion.

Total capital in Event-Driven (ED) strategies increased by $145.0 billion in the quarter on strong demand for exposure to M&A, IPOs and Distressed Situations, bringing total ED capital to $1.59 trillion. ED sub-strategy asset increases were led by Special Situations funds, which grew by $66.0 billion over the prior quarter.

Total assets in Relative Value Arbitrage (RVA) strategies increased by $55.1 billion in 2Q26, inclusive of net asset inflows of $11.7 billion, ending the quarter at an estimated $1.43 trillion. RVA sub-strategy asset increases were led by Multi-Strategy funds, which increased by $37.3 billion to end the quarter with $880 billion AUM, the industry’s second largest sub-strategy, trailing only EH: Fundamental Value.

Macro strategy assets increased by an estimated $36.4 billion in 2Q26, inclusive of net asset inflows of $15.9 billion, bringing total Macro capital to $857.5 billion. Macro sub-strategy asset gains were led by quantitative, trend-following CTA strategies, which increased by $17.8 billion over the prior quarter.

Investor allocations were once again concentrated in the industry’s largest firms in 2Q as firms managing over $5 billion received an estimated $38.1 billion of quarterly net inflows, while mid-sized firms ($1-5 billion AUM) were allocated $6.3 billion, and smaller firms (under $1 billion AUM) added $700 million of net asset inflows. In 1H26, firms managing over $5 billion received an estimated $77.2 billion of net inflows, while mid-sized firms ($1-5 billion AUM) were allocated $10.3 billion, and smaller firms (under $1 billion AUM) received $2.2 billion.

“The dominant trends driving performance and capital growth continue to accelerate into 2H26, alongside evolving geopolitical risks and the potential for further disruptions. While these volatile drivers are difficult to project over an extended period, it is clear that investors are increasingly allocating to hedge funds not only to navigate market micro-cycles but also to reduce overall portfolio volatility and capitalize on rapidly shifting opportunities. As these risks continue to evolve, allocations to hedge funds can be expected not only to continue but to accelerate in 2H26”, added Heinz.