Hedge funds post 5.35% May returns, beat MSCI by 80 basis points
In brief
- Hedge funds returned 5.35% in May, outpacing MSCI's 4.55% gain by 80 basis points
- Tech sector enthusiasm and broad market momentum drove outperformance versus traditional benchmarks
- Hedge fund industry averaged 11.8% returns in 2025, with 90%+ allocator satisfaction
May Performance Outshines Benchmarks
Equity-focused hedge fund stock-picking strategies delivered returns of 5.35% during the month, outpacing the MSCI total return index's 4.55% gain over the same period. A gap of 80 basis points in a single month is the kind of number that makes allocators feel good about writing large checks.
That outperformance matters. Hedge funds, with their higher fees and more complex strategies, need to meaningfully beat standard indices to justify their existence. Tech sector enthusiasm and broad market momentum powered the gains across the board.
Not all managers moved in lockstep. Steve Cohen's Point72, which manages roughly $50.7B in assets, posted a more modest 2% gain for the month. The divergence underscores how stock-picking skill — or luck — still drives individual fund performance.
Allocator Confidence Holds Steady
The May results fit within a broader narrative of hedge fund strength. Average industry returns in 2025 clocked in at approximately 11.8%, and more than 90% of hedge fund allocators reported that their portfolios met or exceeded expectations last year.
Notably, crypto and digital assets received zero mention in the reporting around hedge fund returns. Traditional equity strategies, not digital asset exposure, drove the outperformance story.
