HFRI writes that hedge fund performance accelerated in January driven by strong gains across Macro and Equity Hedge funds, as managers navigated volatile and shifting market cycles, including intense volatility in the commodity sector spurred by evolving geopolitical and macroeconomic uncertainty.
The HFRI Fund Weighted Composite Index (FWC) advanced +3.0 per cent in January, the ninth consecutive month of performance gains, led by trend-following and commodity Macro funds, as well as energy and fundamental growth Equity Hedge funds, as reported today by HFR.
The strong January return extends the recent run of FWC performance after the index advanced +12.4 per cent in 2025, the strongest calendar year since 2009.
Extending the trend from early 4Q25, hedge funds successfully navigated heightened risk-on and risk-off volatility in January. Managers focused on AI-related valuation dynamics while positioning for commodity-driven volatility linked to geopolitical developments in Iran and Venezuela, evolving Federal Reserve leadership considerations, uncertainty on the pace of potential interest rate cuts, and expectations for heightened M&A and IPO activity in 2026.
“Macro hedge funds accelerated historic gains to lead industry performance through the end of 2025 and into 2026, with performance driven by a range of factors including both energy and commodity market reaction to evolving geopolitical situations in Iran and Venezuela, as well as the nomination of Kevin Warsh as the candidate for Chairman of the US Federal Reserve,” says Kenneth J. Heinz, President of HFR.
“The nomination of Kevin Warsh, with his extensive financial markets experience and Macro hedge fund background, should be a strong catalyst for hedge fund and Macro performance in 2026. With heightened economic policy tension between the desire for lower interest rates, persistent inflationary pressures and ongoing concerns about the AI impact on future employment markets, it is likely that a more predictable approach to monetary policy will be beneficial for managers focused on identifying traditional macro drivers of performance, making Macro hedge funds an exciting area of industry performance leadership in 2026.”
Driven by commodity, trend-following, and equities exposures, the HFRI Macro (Total) Index advanced +4.8 per cent in January, the strongly monthly return for the index since May 2003, extending its positive performance streak to eight months, and gaining +15.2 per cent over that period. Macro sub-strategy performance was led by the HFRI Macro: Commodity Index, which surged +6.2 per cent, its strongest monthly return since February 2008 and the second-best monthly gain since index inception. Macro performance was also driven by the HFRI Macro: Discretionary Thematic Index, which jumped +5.2 per cent, and the HFRI Macro: Systematic Diversified Index, which added +5.0 per cent in January. The HFR Cryptocurrency Index fell -9.9 per cent in January, its largest decline since February 2025.
Equity Hedge (EH) funds, which invest long and short across specialized sub-strategies, also posted strong gains in January, navigating intense intra-month volatility and rapidly shifting risk sentiment. The HFRI Equity Hedge (Total) Index gained +3.15 per cent in January, further extending the 2025 return of +16.9 per cent, the strongest calendar year of performance for the Index since 2020 and the 2nd strongest since 2009. Driven by evolving commodity gains and risk, EH sub-strategy performance was led by the HFRI EH: Energy/Basic Materials Index, which surged +6.5 per cent in January, also building on the 2025 return of +20.2 per cent, which was the Energy index’s strongest annual gain since 2021. The HFRI EH: Fundamental Growth Index also posted strong January performance, gaining +4.6 per cent, while the HFRI EH: Fundamental Value Index added +3.5 per cent.
Event-Driven (ED) strategies, which often focus on out-of-favour, deep value equity exposures and speculation on M&A situations, produced positive performance in January driven by expectations for strong M&A and IPO environments in 2026, with an increased focus on AI-related technology and infrastructure opportunities. The HFRI Event-Driven (Total) Index gained +1.4 per cent in January led by the HFRI ED: Distressed Index, which gained +3.4 per cent, and the HFRI ED: Activist Index, which added +1.9 per cent for the month.
Fixed income-based, interest rate-sensitive strategies advanced in January as interest rates held steady despite commodity and macroeconomic uncertainty. The HFRI Relative Value (Total) Index returned +1.2 per cent for the month, led by the HFRI RV: Fixed Income-Convertible Arbitrage Index, which gained +2.0 per cent, while the HFRI RV: Volatility Index added +1.6 per cent.
Liquid Alternative UCITS strategies also advanced in January, as the HFRX Global Index gained +2.0 per cent, while the HFRX Market Directional Index added +2.95 per cent for the month. HFRX main strategy performance was led by the HFRX Macro/CTA Index, which advanced +4.0 per cent, with this driven by the sub-strategy HFRX Macro: Systematic Diversified CTA Index, which added +5.2 per cent for the month.
Hedge fund performance dispersion expanded significantly in January, as the top decile of the HFRI FWC constituents advanced by an average of +14.8 per cent, while the bottom decile of constituents fell by an average of -4.4 per cent, representing a top/bottom dispersion of 19.2 per cent for the month. By comparison, the top/bottom performance dispersion in December was 11.2 per cent. For the trailing 12 months ending January 2026, the top decile of FWC constituents gained +73.1 per cent, while the bottom decile declined -11.1 per cent, representing a top/bottom dispersion of 84.2 per cent. Approximately 80 per cent of hedge funds produced positive performance in January.
NOTE: January 2026 index performance figures are estimated as of February 6, 2026
