Hedge funds enjoyed impressive returns in May, with equity-centric strategies recording gains of 5.35%. This result outstripped the gains of the MSCI total return index, which managed 4.55% over the same period, as reported by Goldman Sachs on June 5.
However, not all major players delivered similar successes. For instance, Point72, led by Steve Cohen and overseeing approximately $50.7 billion in assets, saw a more modest return of only 2% for the month.
Why does this MSCI comparison matter? Passive index investors essentially earned 4.55% just by holding their investments. In contrast, hedge funds, which often come with higher fees and employ more sophisticated strategies, are expected to consistently exceed that benchmark. Achieving an additional 80 basis points in a single month supports their justification, especially considering the long-term effects of compounding returns.
#How Strong Were Hedge Funds in 2025?
In fact, the average returns for the hedge fund industry in 2025 were around 11.8%. This level of performance encourages institutional investors, also known as allocators, to commit significant capital. Notably, over 90% of hedge fund allocators reported that their portfolios either met or exceeded their expectations last year.
#Why Were Crypto and Digital Assets Absent?
An interesting trend to note is the absence of mentions of cryptocurrency and digital assets in discussions about hedge fund returns for May. The cryptocurrency market undoubtedly has its own details, yet it seems the traditional hedge fund sector is content to generate returns primarily through established equity markets, without making significant inroads into digital assets.