- Equity hedge funds capped a strong 2025, helped by an S&P 500 gain of about 16% and wide dispersion that rewarded stock-pickers.
- High Ground Investment Management returned about 39.4% on roughly $2bn, driven by steady gains through the final quarter.
- Bill Ackman’s Pershing Square gained about 20.9% (PSHZF about 25.3% YTD), led by big profits from Fannie Mae and Freddie Mac stakes as the shares surged 300–350%.
- Macro, growth and systematic managers also posted standout results, including Bridgewater Pure Alpha (~33%), Light Street (~37%) and quant funds (~15–17%).
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The year 2025 proved highly favorable for equity hedge funds globally. Despite tariff-related volatility and concerns around AI valuations and macro risks, strong performances across the S&P 500 (>16%) and leading US indices created an environment in which skilled stock-pickers and conviction managers could significantly outperform.
High Ground stands out for its near-40% return, especially impressive given its ~$2 billion scale—firm performance was not a one-off monthly spike but driven by sustained gains in the final quarter. This suggests strong portfolio construction, discipline in risk management, and timing in sector exposures.
Ackman’s Pershing Square reflects intentional concentration and macro thematic exposure: its outsized bets on Fannie Mae and Freddie Mac—whose shares soared 300–350%—were major contributors, alongside exposures in durable growth names like Uber, Alphabet, and Brookfield. Such high conviction paid off but comes with valuation, regulatory and execution risks.
Meanwhile, funds focused on macro and systematic strategies also posted standout returns: Bridgewater’s Pure Alpha at ~33%, Light Street at ~37%, and quant hedge funds registering ~15–17%. This suggests an environment in which diversified exposures, especially those that capture macro trends, AI tailwinds, and factor tilts, added material value.
Strategic implications for institutional investors include re-evaluating allocations toward high conviction managers who can handle concentrated risk, increasing exposure to quant and macro strategies that can navigate volatility, and being mindful of the asymmetric dispersion in returns (top decile far outperformed). Also, with performance already strong, questions arise about sustainability—particularly given rate policies, geopolitical risk, and valuation pressures in AI and tech sectors.
Supporting Notes
- High Ground Investment Management returned ~39.4% in 2025; firmwide assets ~$2 billion.
- High Ground’s final quarter monthly returns: 2.5% in October, 3.6% in November, 3.5% in December.
- Pershing Square returned ~20.9% for full year 2025; its London listed fund PSHZF was ~25.3% YTD as of mid-September.
- Fannie Mae and Freddie Mac shares increased by ~300-350% in 2025; Pershing Square held ~180 million shares combined and made over $2 billion profit from these positions alone.
- Light Street returned ~37.3% in 2025.
- Bridgewater Associates’ Pure Alpha fund surged ~33%; other Bridgewater funds (Asia Total Return ~36.9%, China Total Return ~34.2%) also had strong returns.
- Quant hedge funds: Quantedge achieved ~15.2%, Neo Ivy Capital ~16.5%.
- HFR data shows Equity Hedge funds averaged ~15.6% through November 2025.