Hedge funds on track for another stellar year on AI boom

Global hedge funds are on track for another strong year, according to a Goldman Sachs note reviewed by Reuters. The bank projects hedge funds could surpass 2025 returns after AI-driven gains boosted performance across most strategies in the first half of 2026. Hedge funds returned an average of 7% in the first six months, compared with a 10-year average of 4.1%, and outperformance has occurred for six consecutive half-year periods. Goldman cited a risk-asset rebound, including an equity rally that helped offset softer fixed income, lifting a 60/40 passive portfolio to 5.7%. Investor demand also rose: a July survey of 341 allocators managing over $1.5 trillion found nearly half planned to increase hedge fund exposure.