HedgeCo.Net — Global hedge fund capital ended the third quarter at an estimated $5.64 trillion, a narrow gain that marked the industry’s 16th consecutive quarterly increase, according to HFR’s latest Global Hedge Fund Industry Report. Unlike the first half of the year, when performance did most of the work, the third quarter was carried by new money: investors allocated an estimated net $34.5 billion, more than offsetting performance-based declines of $27.4 billion.
Through the first three quarters of 2026, total industry capital rose by $480 billion, including $124.1 billion of net investor inflows. HFR president Kenneth J. Heinz said the quarter was dominated by sharp interest rate increases and technology and AI volatility, and that investors kept allocating to funds that had navigated shifting rate, technology and geopolitical conditions.
Macro led asset growth, adding an estimated $40.0 billion, including $8.8 billion of net inflows, to reach $897.4 billion. Quantitative, trend-following CTA strategies accounted for $23.5 billion of that gain. Relative value arbitrage assets rose $19.2 billion to about $1.45 trillion, with multi-strategy funds climbing $19.8 billion to a record $900 billion.
The losses were concentrated where the AI trade hurt most. Equity hedge assets fell an estimated $31.6 billion to $1.72 trillion despite $6.0 billion of inflows, led by a $30.3 billion drop in technology and healthcare funds. Event-driven capital declined $20.5 billion to $1.57 trillion even with $4.9 billion of inflows, as special situations funds lost $30.3 billion on poor performance.
The flows also kept favoring scale. Firms managing more than $5 billion took in an estimated $36.6 billion during the quarter, while mid-sized firms with $1 billion to $5 billion saw a net outflow of $2.3 billion and firms under $1 billion added only about $190 million. Heinz said hedge funds head into the U.S. midterm elections positioned for a wide range of policy outcomes and the potential for further volatility and dislocation.