Hedge funds navigated through a volatile stock market to post strong returns in 2024. But they’re on edge heading into 2025 as uncertainty swirls around President-elect Donald Trump’s policies.
As investments, hedge funds are as much about protection as returns. During Trump’s first term, they outperformed the market in just one year, 2018, when the S&P 500 Index lost 6.2% while hedge funds dropped just 3.4%. This time around, the thinking is their strategies could best manage disruptions if the new administration’s policies weigh on the economy or stock market.
“There’s so much uncertainty around what the policies are going to be, how much is bluster, how much is real and how quickly these things happen,” said Jonathan Caplis, chief executive officer of the hedge fund research firm PivotalPath.