Hedge Funds Top Benchmarks as Volatility Rewards Tactical Trades

Hedge funds and active managers are outperforming passive benchmarks in early 2026 as tariff volatility and geopolitical tensions reward tactical positioning. The Bloomberg All Hedge Index gained nearly 3% in January, its best performance in over two years, doubling the S&P 500’s return. Quantitative strategies rose 1.1%, while risk-parity ETFs jumped 10% year-to-date. The S&P 500 remains stalled near 7,000, while gold exceeded $5,000 and oil surged following President Donald Trump’s warning to Iran and subsequent tariff policy shifts. Ten-year Treasury yields hover near 4%.