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In August, global financial markets gained as investors positioned for potential interest rate cuts and steady inflation data, supporting a more constructive outlook for the second half of the year. Equity gains were led by small caps, technology, and emerging markets, as many companies reported strong earnings with limited negative impact from tariffs. Interest rates were mixed: shorter-dated yields declined while longer-dated yields posted a modest increase, leading to a steeper yield curve as the U.S. dollar weakened against most major currencies. Commodities delivered mixed results, with gains in gold, silver, and coffee offset by declines in oil, natural gas, and hogs.

Hedge funds gained in August led by Macro strategies, with the HFRX Market Directional Index gaining +1.29% and the HFRX Global Hedge Fund Index gaining +1.12%.

HFRX Macro/CTA Index gained +1.99% for the month from gains systematic trend-following managers. The HFRX Macro/Systematic CTA Index gained +2.83% as the US Dollar weakened against most major currencies. Commodities had a mixed performance with gains in coffee, silver, and gold and declines in hogs, oil, and natural gas.

HFRX Equity Hedge Index gained +1.49% in August from gains in fundamental growth, value, and market neutral strategies. The HFRX Fundamental Value Index gained +1.65% for the month from gains concentrated in large-cap US and European equities. The HFRX Fundamental Growth Index gained +1.35% from gains in exposure to small-cap US and European equities. The HFRX Equity Market Neutral Index gained +0.74% from gains in mean reverting, factor-based strategies.

HFRX Event Driven Index gained +0.71% for the month from gains in merger arbitrage strategies and special situations managers. The HFRX Merger Arbitrage Index gained +1.43% as global equity markets saw decreased volatility and gains in August. The HFRX Special Situations Index gained +0.66% from gains in exposure to global, catalyst-driven fundamental value equities.

HFRX Relative Value Index gained +0.63% from gains in convertible arbitrage strategies and multi-strategy managers. The HFRX Fixed Income Convertible Arbitrage Index gained +1.40% as volatility fell in August. The HFRX RV: Multi-Strategy Index gained +0.56% as shorter-dated interest rates declined and longer-dated rates increased in August.

Comments reference performance figures as of August 29, 2025