Check out the winning hedge fund strategies of 2025

Published Fri, Dec 19 20252:49 AM ESTUpdated Fri, Dec 19 20254:51 AM EST

Key Points

Equity long/short hedge funds triumphed in 2025, with healthcare-focused managers the standout performers.
But industry data provider PivotalPath warns of continued correlation between hedge funds and broader stock markets.
For investors, diversification across strategies and sectors remains key to drawdown management.

Healthcare stocks, media and telecoms companies, and Asian equities were among hedge funds' best trades this year, with just two weeks left on the calendar. Overall, equity-focused funds — which trade stocks long and short by sector, geography or theme — are the top-performing category in the 11 months to the end of November, according to analysis from PivotalPath. The industry data provider's Equity Sector Index is up 22.7% so far this year. The benchmark tracks the performance of equity hedge funds that trade multiple sectors including retail, financials, healthcare, telecoms and media, energy and industrials. Standout performers Among the wide range of hedge fund trading different strategies and asset classes, healthcare-focused equity funds are the leading sub-strategy this year. Between the start of January and the end of November, they posted a near-36% gain. Funds targeting Asian equity markets are up 19%, followed by managers focused on technology, media and telecommunications stocks, which have risen 17.5%. Elsewhere, event-driven funds — which seek to profit from mispricings tied to mergers, bankruptcies, takeovers and other corporate catalysts — are up 12.1% year-to-date. Multi-strategy managers have gained 9.2% over the same period. Meanwhile, PivotalPath's Global Macro Index — which tracks strategies betting on macroeconomic and geopolitical trends using equities, bonds, currencies, commodities and other assets — is up 8.6%. Overall, PivotalPath's broader Composite Index, which measures the performances of 1,100 managers across all strategies and geographies, providing an industry-wide snapshot of hedge fund returns, is up 10.8% year-to-date. However, PivotalPath cautioned that correlations between hedge funds — supposedly a portfolio diversifier — and broader equity markets still remain at historic highs , and could "catch investors off guard" in a stock market unwind. .GSPHC YTD mountain S & P 500 Health Care Sector. Beyond the industry's generally positive returns, Michaël Lok, group CIO and co-CEO asset management at Union Bancaire Privée, highlighted the continued dispersion between certain strategies and sectors during 2025. "Although sector-specific managers can outperform at times, 2025 is a great example of how diversifying across styles and factors is key to portfolio construction and drawdown management," Lok said in a UBP commentary. A robust outlook Zeroing in on healthcare hedge funds' successes, PivotalPath pointed to several themes underpinning the sector's strong run, including the weight-loss drug "arms race," Medicare price negotiations, and mounting pressure on larger pharmaceutical companies facing patent cliffs and loss of exclusivity. "In the final stretch of 2025, healthcare is offering hedge funds something they've been short of elsewhere — clean dispersion," PivotalPath said in its monthly report. Trial readouts, label expansions, pricing headlines and takeover rumors are driving clear winners and losers, creating fertile ground for idiosyncratic trades, it added. "Managers say the opportunity set is clear: Own differentiated science with multiple shots on goal; finance it against frothier consensus names; and keep one eye on deal terms, because the tape is already telling funds that the market is willing to pay for credible assets," PivotalPath said. Rhenman & Partners Asset Management — a healthcare hedge fund trading pharma, biotech, med-tech and healthcare services companies long and short across all market caps globally — sees further upside on the horizon. In its latest monthly performance report, Rhenman pointed to greater political and regulatory clarity as well as a growing IPO pipeline for 2026. "The continued strong fundamentals and the growth outlook, together with an active deal environment and attractive valuations, underpin a robust set-up right across the healthcare sector," the Stockholm-headquartered firm said.