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The HFRI Fund Weighted Composite Index (FWC) declined by -1.1 percent for the month, as gains in Macro strategies were offset by declines across Equity Hedge, Event Driven, and Relative Value Arbitrage strategies, as reported by HFR. In the first quarter, the HFRI FWC Index posted an estimated narrow decline of -0.38 percent.

The HFR Cryptocurrency Index fell sharply in March, losing -7.8 percent as managers navigated a surge in volatility and steep declines across Bitcoin and other cryptocurrencies, while the new sub- strategy HFR Cryptocurrency-Quantitative Index advanced +2.5 percent for the month. As recently announced, HFR introduced 11 innovative, sophisticated and specialized sub-strategies focused on the Cryptocurrency and Blockchain space.

The HFRI Multi-Manager/Pod Shop Index fell only -0.6 percent for the month as managers also navigated the policy and technology volatility.

Hedge fund performance dispersion expanded in March, as the top decile of the HFRI FWC constituents advanced by an average of +6.6 percent, while the bottom decile fell by an average of -10.0 percent, representing a top/bottom dispersion of 16.6 percent for the month. By comparison, the top/bottom performance dispersion in February was 14.6 percent. In the trailing 12 months ending March 2025, the top decile of FWC constituents gained +26.1 percent, while the bottom decile declined -21.8 percent, representing a top/bottom dispersion of 47.9 percent. Approximately forty percent of hedge funds produced positive performance in March.

Uncorrelated Macro strategies led strategy gains in March as overall volatility surged, with the HFRI Macro (Total) Index gaining +0.25 percent for the month. Macro sub-strategy gains were led by the HFRI Macro: Discretionary Thematic Index, which jumped +2.0 percent, and the HFRI Macro: Multi- Strategy Index, which added +1.5 percent. Over the first quarter, the HFRI Macro (Total) Index advanced an estimated +0.10 percent Fixed income-based, interest rate-sensitive strategies posted their first monthly decline since October 2023, with the HFRI Relative Value (Total) Index falling an estimated -0.05 percent in March.

RVA sub-strategy performance was mixed, as gains in the HFRI RV: Volatility Index (+1.1 percent) were more than offset by losses across the HFRI RV: FI Convertible Arbitrage Index (-0.75 percent), HFRI RV: FI-Sovereign Index (-0.71 percent), and HFRI RV: Multi-Strategy Index (-0.21 percent). For the quarter, the HFRI RV (Total) Index led all main strategies with a +1.73 percent return.

Equity Hedge (EH) funds, which invest long and short across specialized sub-strategies, fell in March, as Technology and Healthcare equities suffered steep declines on the trade/tariff volatility, with the HFRI Equity Hedge (Total) Index falling -1.96 percent. EH sub-strategy losses were driven by the HFRI EH: Technology Index, which declined -6.2 percent for the month, while the HFRI EH: Healthcare Index lost -3.6 percent. The March decline of the HFRI EH (Total) Index drove down 1Q25 performance to an estimated loss of -1.28 percent Event-Driven (ED) strategies, which often focus on out-of-favor, deep value equity exposures and speculation on M&A situations, also declined in March, with the HFRI Event-Driven (Total) Index falling -2.4 percent for the month. ED sub-strategy performance declines were led by the HFRI ED: Activist Index, which fell -6.5 percent, and the HFRI ED: Special Situations Index, which lost -4.7 percent in March; these declines were partially offset by the HFRI ED: Merger Arbitrage Index, which advanced +0.41 percent for the month. For the quarter, the HFRI ED (Total) Index declined an estimated -1.6 percent.

Liquid Alternative UCITS strategies also posted mixed performance in March, with the HFRX Absolute Return Index posting a narrow gain of +0.03 percent while the HFRX Global Hedge Fund Index fell -0.75 percent. Both the HFRX Equity Hedge Index and HFRX Macro Index declined -1.33 percent for the month, while the HFRX Event Driven Index posted a narrow decline of -0.12 percent. For the month of April through Thursday, April 3, the HFRX Global has declined -0.47 percent while the HFRX Absolute Return Index has fallen only -0.24 percent.

"Hedge funds navigated the historic, tariff driven surge in financial market volatility in March and early April, with gains in uncorrelated Macro strategies and steep declines in equity markets, driven down by the large cap technology sector. With volatility and declines accelerating into early April, hedge funds continued to actively navigate the market turmoil, with the HFRX Global posting a decline of -0.62 percent on April 3, while the HFRX Absolute Return Index fell -0.36 percent on the same day," stated Kenneth J. Heinz, President of HFR. "With the violent surge in risk off sentiment and expectations for a continuation of the uncertainty, institutions and investors are likely to increase allocations to hedge funds which have provided defensive outperformance through the current volatility and potential dislocations."