Hedge Funds Outpace Benchmarks in May Rally

Hedge funds experienced a profitable May, with stock-picking strategies outperforming global benchmarks. These funds achieved a 5.35% return, exceeding the MSCI total return index's 4.55% gain.

The market rally was significantly boosted by the U.S. tech sector, contributing to the S&P 500's longest winning streak since December 2023. Hedge funds responded by increasing their stock purchases at the fastest pace since June 2025.

Key sectors attracting speculative investment included information technology, consumer discretionary, and financials. Conversely, energy, communications services, and consumer staples were net sells. Leverage within hedge funds climbed to a five-year high, indicating increased risk appetite.

While tech-focused positions drove gains, some losses stemmed from investments in industrial firms. Systematic stock trading hedge funds reported a 0.84% return for May. Major multi-strategy funds, such as Citadel and Millennium Management, delivered returns of 1.43% and 2.4% respectively.