Hedge Funds Ride AI Wave to Best Performance in Years

Goldman Sachs analysts noted that equity long/short strategies were the primary engine of this growth, delivering average gains of 17.7%. These managers successfully leveraged significant performance gaps between individual stocks, navigating crowded trades to secure double-digit returns by the end of June. This performance has widened the gap between hedge funds and traditional 60/40 portfolios, with the former outperforming the latter by approximately 250 basis points annually over the past five years.

Institutional appetite for these returns has reached record levels. A recent survey of 341 allocators managing over $1.5 trillion revealed that nearly half intend to increase their hedge fund exposure before the year ends. Notably, every major hedge fund strategy saw fresh capital inflows during the first half of 2026, a milestone not achieved in the previous five years. Quantitative and multi-strategy funds were particularly successful, as investors continue to prioritize vehicles capable of generating alpha in an increasingly complex market environment.