Hedge fund returns in 2025 reveal a clear split between funds that quickly adapt to market swings and those relying on rigid algorithmic trend-following strategies.
Systematic trend funds, which use algorithms to ride market trends until they fade, have struggled this year. They are down more than 11% through May, with major players like Systematica, Transtrend, and Aspect Capital reporting losses between 15% and 18.5%.
In contrast, discretionary macro hedge funds that use judgment to time trades and select assets have gained nearly 7% year-to-date. These funds have been better at navigating the unpredictable market moves triggered by U.S.
President Donald Trump’s erratic policy decisions. According to Gwyn Roberts of PivotalPath, trend funds have been repeatedly “whipsawed” by sudden market reversals, failing to lock onto consistent trends.
The volatile market saw European stocks rise about 10% by late February before plunging 20% in two weeks around late March, coinciding with tariff announcements. Similar swings affected U.S. stocks. Trend funds suffered from poor positions in U.S. Treasuries, the Australian dollar, Japanese government bonds, and commodities like coffee in May.
However, the performance gap between trend and macro funds has narrowed since April as markets rebounded. Discretionary macro funds posted positive returns in the first five months, with Rokos Capital Management up 9.5%, EDL Capital surging 24%, and Brevan Howard’s Alpha Strategies gaining 4.3%, though its flagship fund fell slightly.
Historical data shows macro traders average an 8.5% annual return, while managed futures (including trend funds) average 7.2%. Discretionary macro traders have even higher average returns of 9.6% since 2001. Managed futures are often seen as defensive investments that perform well when other strategies falter.
Some large hedge funds combine both approaches to balance risks. For example, Man Group’s systematic AHL Alpha Programme dropped 10.6% this year, but its multi-strategy fund rose about 5.4%.
AQR Capital Management’s multi-strategy fund gained 10.6%, and its alternative trend strategy was up 7%, bucking the broader trend.
Overall, hedge funds face challenges amid whipsawing markets, but those with flexible, discretionary strategies have shown resilience compared to algorithm-driven trend followers.
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