Hedge funds had a strong 2025, but 3 charts show lurking risks that have investors on edge

Hedge funds entered 2025 with momentum and optimism.

After a banner year in 2024, Goldman Sachs’ February outlook report found “buoyant sentiment” among investors following “unequivocally one of the best years for the hedge fund industry in recent memory.” More than 90% of allocators told the bank their hedge fund portfolios met or exceeded expectations — the highest share on record, Goldman said.

Investors have rewarded that confidence with another strong year. Through November, hedge funds gained 10.8% in 2025, according to PivotalPath’s composite index, putting the industry on pace to eclipse 2024. Nearly every major strategy has delivered positive returns.

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