The losses were led by the equity hedge and emerging markets focused funds, Chicago-headquartered HFR said in a statement.

For all their ability to navigate market shifts and profit by shorting stocks and other moves, the drama of March dragged returns down overall. In 2025, hedge funds chalked up the strongest calendar year returns since 2009 in the aftermath of the global financial crash. 

Equity hedge funds, which invest long and short across specialized sub-strategies, led strategy declines in March, with the HFRI Equity Hedge Index falling 4.3 per cent, the sharpest decline since March 2020. Equity hedge sub-strategy performance declines were led by the HFRI EH: Fundamental Growth Index, which slumped by 6.8 per cent, and the HFRI EH: Multi-Strategy Index, which lost 6.4 per cent in March, HFR said. 

"Financial markets performance whipsawed throughout March as a result of the Iran military conflict, resulting in historic spikes in volatility and oil prices, as well as significant disruptions and dislocations across global markets,” Kenneth Heinz, HFR president, said. "March was dominated by rapidly changing news headlines and daily shocks leading to significant intra-month and intra-day reversals in asset prices. While growth and equity strategies were most impacted by this volatility, credit, fixed income and arbitrage strategies generated mixed performance.”

March returns reflected a broad risk-off reset driven by geopolitical shock, rising inflation expectations, and higher rates. First, US equities sold off across the board. The S&P 500 fell 5.1 per cent, with equal-weight even weaker at -6.0 per cent, confirming broad participation in the drawdown .

Fixed income-based, interest rate-sensitive strategies posted mixed performance in March despite the sharp increase in interest rates, as investors re-positioned for higher rates throughout the year, as well as no rate cuts in 2026 because of the inflationary impact of sharply higher oil prices. The HFRI Relative Value Index posted a decline of 0.7 per cent for the month, though volatility-focused funds generated gains, as the HFRI RV: Volatility Index rose 2.6 per cent in March. 

Losses were driven by the HFRI RV: FI- Sovereign Index, which fell 2.5 per cent and the HFRI RV: FI-Convertible Arbitrage Index, which lost 1.6 per cent in March. For 1Q26, the HFRI Relative Value Index gained 1.3 per cent.

Macro 
Navigating the surge in oil prices and sharp declines across equity and fixed income markets, the HFRI Macro Index fell 2.35 per cent in March; despite the monthly decline, the Index advanced 4.4 per cent in the first quarter of this year. Macro sub-strategy declines in March were led by the HFRI Macro: Discretionary Thematic Index, which fell 5.1 per cent.

Event-driven strategies – which exploit price movements in and around events such as corporate takeovers – fell in March, as expectations for strong M&A and IPO environments in 2026 were offset by geopolitical uncertainty and weakness in private credit strategies.