According to Chicago-based hedge fund consulting firm Hedge Fund Research, hedge funds posted robust gains in February as the HFRI Fund Weighted Composite Index rose 1.92% for the month, marking the tenth consecutive month of performance gains.
February 2026 Hedge Fund Performance
During February, the HFRI Fund Weighted Composite Index rose +1.92%, led by Macro and energy and healthcare Equity Hedge Fund strategies. As a result of this robust gain, this index rose 4.38% on a year-to-date basis and +16.45% over the past twelve months. Approximately 75% of all hedge funds produced a positive performance in February.
Uncorrelated Macro strategies surged +3.02% in February following a January gain of +4.15% which was the strongest monthly return for the index since May 2003. The February gain extends its positive performance streak to nine months, an index increase of +17.9% percent over that period. Macro sub-strategy gains were led by the HFRI Macro: Commodity Index, which rose +4.14% while the HFRI Macro: Systematic Diversified and Directional Indices both rose by +3.66% for the month. On a year-to-date basis the HFRI Macro Index rose +7.30%.
Equity Hedge (EH) funds, which invest long and short across specialized sub-strategies, posted a strong gain for the month as Energy and Healthcare stocks experienced substantial strength during the month. EH sub-strategy gains were led by the HFRI EH: Energy/Basic Materials Index, which surged +4.6% for the month, while the HFRI EH: Healthcare Index jumped +3.7%. Over the past two months, the HFRI Equity Hedge Index rose +4.92% while the same index surged +21.8% over the past twelve months.
Fixed income-based, interest rate-sensitive strategies produced another modest gain in February as the HFRI Relative Value (Total) Index advanced an estimated +0.66% for the month. The hedge fund strategies which led this performance included the HFRI RV: Yield Alternatives Index, which gained +2.1%, while the HFRI RV: Volatility Index added +1.2%. Over the past two months, the HFRI RV Index rose +1.87% while the RV index posted a +7.65% gain over the past twelve months.
Event-Driven (ED) strategies, which often focus on out-of-favor, deep value equity exposures and speculation on M&A situations, also rose modestly in February as the HFRI Event-Driven (Total) Index advanced +0.33% for the month. ED sub-strategy performance was led by the HFRI ED: Distressed/Restructuring Index, which jumped +1.94%, and the HFRI ED: Directional Index, which added +1.14% for the month. On a year-to-date basis, the HFRI ED Index rose +1.58% while this index recorded an +11.82% gain over the last twelve months.
Our Take
Hedge funds recorded a healthy performance in February 2026, extending the bullish trend from 4Q25 that continued through January, as hedge funds were able to successfully navigate the market volatility caused by the surging geopolitical risk in the buildup to the military conflict in Iran, which began in the latter part of February.
Kenneth J. Heinz, President of HFR explained the performance of the hedge fund industry in February saying, “Financial market risk sentiment oscillated between risk on and off throughout February, before ending the month on a strong risk off trend that accelerated into early March. Hedge funds posted strong, positive (negatively correlated) performance in February, led by Macro and Equity Hedge funds as volatility increased throughout the month driven by AI-related equity market weakness, pressure in private credit portfolios, and rising tensions across commodity and equity markets in the late month military buildup leading into the Iran military conflict. Geopolitical risk has surged to a historic level and hedge funds are actively navigating an unprecedented spike in financial market volatility and dramatic dislocations through the first week of March, which may not only continue but accelerate based on the developments and evolution of the military conflict in Iran. With volatility and risk likely to continue in coming weeks, investors interested in opportunistic, defensive exposure to these powerful trends are likely to allocate to hedge fund managers which have demonstrated strong performance through high risk and high volatility trading environments.”
As we have mentioned in the past, hedge funds have historically been the one client segment that has shown the most robust appetite for sell-side and independent investment research, as well as for alternative data. Clearly, the investment research and alt data businesses rely on this demand to propel their businesses during volatile market conditions. Consequently, hedge funds will need to continue to outperform the rest of the financial markets and attract new assets to support their willingness to pay up for sell-side and independent research, as well as alternative data throughout 2026.
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