In hedge fund management,
alpha refers to the portion of investment returns generated by a manager's specific skills and active decisions, independent of broad market movements (beta). Following a period of muted performance known as the "alpha winter," early 2026 reports indicate a significant resurgence in alpha generation due to high market dispersion and increased volatility.Key Performance Trends (2025–2026)
Hedge funds entered 2026 with strong momentum after back-to-back years of double-digit returns in 2024 and 2025.
- Average Alpha: In 2025, hedge funds delivered an average alpha of over 3%.
- Strategy Standouts:
- Quant Equity: Led all strategies with approximately 5.8% alpha in 2025.
- Discretionary Equity: Generated significant alpha of 5.7%.
- Equity Market-Neutral: Recently produced a high alpha of 8.47%.
- Asset Growth: Total industry assets under management (AUM) surpassed $5 trillion by 2026.
