Key Takeaways
- • The With Intelligence Hedge Fund Index delivered 4.95% returns in Q2 2026, bringing first-half performance to 5.08%, with the asset-weighted index outperforming at 5.30% quarterly and 6.23% year-to-date, signaling larger managers are capturing gains more effectively than smaller peers.
- • Asia-focused hedge funds dominated regional performance with a 9.73% Q2 gain (8.23% first-half), significantly outpacing North America's 6.89% quarterly return and Europe's 4.96%, driven partly by a 7.44% surge in April alone.
- • Long/short equity strategies led across all approaches with 7.73% quarterly gains, building on a 16.28% 2025 return, while event-driven strategies contributed 5.3% to the quarter's rebound.
- • The industry recovered from a -3.03% March drawdown through consecutive monthly gains (3.67% in April, 1.56% in May), though June saw a modest -0.32% pullback, with trailing 12-month performance at 12.2% following an 11.11% calendar 2025 gain.
- • Credit-focused strategies dominated capital flows into hedge funds during the quarter, reflecting institutional investor appetite for fixed-income and structured credit opportunities in the current market environment.
Summary
Hedge funds staged a meaningful rebound in the second quarter of 2026, with the With Intelligence Hedge Fund Index posting 4.95% returns to deliver first-half year-to-date gains of 5.08%. The asset-weighted version of the index, which reflects the performance of the industry's largest capital pools, performed even stronger at 5.30% for the quarter and 6.23% for the first half, according to data released in July 2026. This divergence between equal-weighted and asset-weighted returns indicates that larger, established managers have successfully navigated 2026's volatile market conditions more effectively than their smaller competitors.
The Q2 performance marked a recovery from a volatile opening half to the year. Following a sharp -3.03% decline in March, the composite index surged 3.67% in April before adding 1.56% in May. June proved less robust with a -0.32% decline, yet the positive momentum in April and May was sufficient to drive the quarterly rebound. On a trailing 12-month basis, hedge funds have delivered 12.2% in returns, extending the industry's strong 2025 performance, which posted an 11.11% gain for the calendar year.
Regional performance diverged substantially in Q2, with Asia emerging as the clear outperformer. The With Intelligence Asia Hedge Fund Index gained 9.73% for the quarter, driven significantly by an exceptional 7.44% return in April alone, bringing first-half performance to 8.23%. North America followed with 6.89% quarterly gains (7.24% year-to-date), while Europe returned 4.96% (3.49% year-to-date). This Asian outperformance reflects both regional economic dynamics and the concentration of long/short equity strategies across the region.
Long/short equity strategies dominated the strategic landscape, delivering 7.73% quarterly returns and 7.04% first-half performance, building on the strategy's exceptional 16.28% return in 2025. Event-driven strategies contributed 5.3% to the quarter's results, demonstrating continued investor confidence in fundamental value-driven approaches. Capital flows during the period were led by credit-focused strategies, reflecting institutional investor demand for exposure to fixed-income and structured credit markets amid the current interest rate environment and credit conditions.
The Q2 performance marked a recovery from a volatile opening half to the year. Following a sharp -3.03% decline in March, the composite index surged 3.67% in April before adding 1.56% in May. June proved less robust with a -0.32% decline, yet the positive momentum in April and May was sufficient to drive the quarterly rebound. On a trailing 12-month basis, hedge funds have delivered 12.2% in returns, extending the industry's strong 2025 performance, which posted an 11.11% gain for the calendar year.
Regional performance diverged substantially in Q2, with Asia emerging as the clear outperformer. The With Intelligence Asia Hedge Fund Index gained 9.73% for the quarter, driven significantly by an exceptional 7.44% return in April alone, bringing first-half performance to 8.23%. North America followed with 6.89% quarterly gains (7.24% year-to-date), while Europe returned 4.96% (3.49% year-to-date). This Asian outperformance reflects both regional economic dynamics and the concentration of long/short equity strategies across the region.
Long/short equity strategies dominated the strategic landscape, delivering 7.73% quarterly returns and 7.04% first-half performance, building on the strategy's exceptional 16.28% return in 2025. Event-driven strategies contributed 5.3% to the quarter's results, demonstrating continued investor confidence in fundamental value-driven approaches. Capital flows during the period were led by credit-focused strategies, reflecting institutional investor demand for exposure to fixed-income and structured credit markets amid the current interest rate environment and credit conditions.
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