In 2025, small hedge funds outperformed larger peers, with funds under $100 million leading the pack with a 14.6% return, favored by strong stock-market gains. Hedge fund managers delivered a strong year, gaining 10.8% through November, rewarding investors who poured billions into the industry.

In contrast to 2024, small hedge funds ruled in 2025, outperforming larger peers through November. Factors like a scorching stock market, S&P 500 up 18% and Nasdaq up 21%, favored smaller firms using long-short equity strategies requiring less capital and infrastructure.

Even at large multistrategy firms, smaller funds shone in 2025, benefiting from a strong stock market. Smaller funds outperform in bull markets, offering greater flexibility in stock selection and trade execution. The winning streak for small funds may not extend into 2026, given market uncertainties.

Read more at Yahoo Finance: Why small hedge funds ruled in 2025