Hedge Funds Post Gains in May Despite Bond Market Pain

Hedge funds achieved positive returns in May through their ability to benefit from stock market recovery while they managed through volatile conditions in bond and commodity markets. Hedge fund performance according to JPMorgan's prime brokerage reached 3% in May which resulted in a total year-to-date return of 5%.

Stock-picking funds led the way, returning 3% in May as equities staged a comeback from April’s global trade shocks. Multi-strategy funds rose 2.5%, while quantitative strategies using systematic models gained 4.2%.

But fixed income and commodities proved a tougher challenge. The market losses in fixed income and commodities affected many funds because U.S. and Japanese debt yields increased due to rising concerns about government debt levels and unpredictable trade policies from the Trump administration.

The $1.1 billion Singapore-based Arrowpoint Investment Partners identifies new market arbitrage opportunities because of tariffs and inflation concerns. The Apex Strategy at AQR Capital achieved a 2.4% return in May through its stock selection and corporate arbitrage strategies.

The systematic trading strategies of London-listed Man Group's AHL Alpha Fund resulted in a 2.2% decline during May which brought its total 2025 performance to -11%. The multi-strategy fund at the company maintained positive returns throughout the year.

The current market volatility combined with unpredictable trade winds makes it difficult for investors to achieve consistent performance. The portfolio manager at Man Group observed that traders must exit positions at an accelerated pace because rates and commodities lack clear direction.