Rising markets and the success of strategies including those involving mergers and acquisitions and cryptos delivered the goods for hedge funds last month. So far this year, Japan-focused funds have been the strongest of any category by global region.

The traditional vacation month of August proved to be pleasant too for the world’s hedge fund sector, industry figures show. Hedge Fund Research said its HFRI Fund Weighted Composite Index rose an estimated 2.3 per cent in August, translating into 7.28 per cent since the start of 2025.

Gains were driven by rising equity markets, falling bond yields, and expectations for interest rate cuts, as well as continuing evolution of geopolitical risks, including developments on trade/tariff negotiations, the US Federal Reserve, and continued efforts to resolve military conflicts, Chicago-headquartered HFR said this week.

The HFRI Equity Hedge (Total) Index led strategy gains, rising by an estimated 3.3 per cent for the month; the HFRI Event-Driven (Total) Index advanced 2.0 per cent. The HFR Cryptocurrency Index gained 2.5 per cent in August.

Equity hedge (EH) funds, which invest long and short across specialized sub-strategies, rose by 3.3 per cent for the month.

Event-driven (ED) strategies, which often focus on out-of-favor, deep value equity exposures and speculation on M&A situations, also advanced in August. The HFRI Event-Driven (Total) Index added an estimated 2.0 per cent for the month.

Uncorrelated macro strategies gained last month: The HFRI Macro (Total) Index advanced an estimated 1.5per cent.

Big in Japan
HFRI Japan Index has delivered the largest year-to-date gains of all global regional categories, at 16.34 per cent, figures showed.

“Strong hedge funds gains accelerated in August as global equites eclipsed record highs and investors positioned for lower US interest rates while the uncertainty regarding tariff negotiations continued to evolve,” Ken Heinz, HFR president, said in a statement.

Bridgewater Associates is the world’s largest hedge fund business; at the end of July its founder, Ray Dalio, officially sold his remaining ownership stake and resigned from the firm’s board (Reuters, July 31, 2025), wrapping up a transition process that began in 2017. Other prominent hedge fund businesses by AuM are Man Group; Elliott Investment Management; Millennium Management; Citadel; The Children's Investment Fund Management (TCI); DE Shaw & Co; Two Sigma; Goldman Sachs Asset Management; and Farallon Capital.