The figures came from Chicago-headquartered . 

The sector had to cope with a surge in geopolitical risk and volatility in the first quarter of 2026, led by the surge in oil prices and uncertainty driven by escalation of the Iran military conflict. Risk aversion was driven by weakness in large cap technology and software companies threatened by expanding AI capabilities, as well as weakness and illiquidity risks associated with private credit exposures. (See here and here.) 

Industry capital grew by $64.0 billion in Q1, driven by estimated net asset inflows of $44.5 billion, nearly matching the $44.8 billion of inflows in Q4 2025. The trailing two-quarter total of $89.3 billion of net asset inflows is the highest two-quarter period since 2007 and follows the 2025 total of $115.8 billion in net inflows, the strongest calendar year of investor inflows since 2007.

“Against the powerful backdrop of risk and uncertainty driven by the Iran military conflict/shipping supply chain disruption, AI software industry disruption, private credit weakness and macroeconomic/geopolitical uncertainty stemming from the transition at the US Federal Reserve, US midterm elections, and the potential for shifting in military alliances, institutional investors continue allocating to hedge funds," stated Kenneth J Heinz, president of HFR.

Funds posted performance gains through the quarter, led by the HFRI Macro (Total) Index, which surged 4.9 per cent for the quarter, despite declining 1.95 per cent in March.

The fixed income-based HFRI Relative Value (Total) Index advanced 1.4 per cent for the quarter, while the HFRI Fund Weighted Composite Index® added 1.05 per cent in the quarter as equities declined and oil surged over 40 per cent in March on the escalation of the Iran military conflict. 

Macro strategy assets increased by an estimated $34.5 billion in Q1 2026, inclusive of net asset inflows of $11.1 billion, bringing total macro capital to $821.0 billion. 

Total assets in relative value arbitrage strategies increased by $17.8 billion, rising to an estimated $1.37 trillion inclusive of net asset inflows of $5.5 billion. 

Equity hedge strategies grew by $14.9 billion in the quarter, as net asset inflows of $16.2 billion outweighed the narrow performance-based losses, bringing total EH capital to $1.58 trillion.

Total capital in event-driven strategies declined narrowly in the quarter, as performance-based asset losses more than offset estimated net inflows of $11.6 billion, bringing total ED capital to $1.45 trillion.