With two weeks left in the year, healthcare stocks, media and communications companies, and Asian stocks are the best trades for hedge funds this year. Overall, equity-focused funds that trade long and short stocks by sector, region, or theme were the best-performing category in the 11 months to the end of November, according to PivotalPath’s analysis. The industry data provider’s stock sector index is up 22.7% since the beginning of the year. This benchmark tracks the performance of equity hedge funds that trade across multiple sectors including retail, financials, healthcare, communications and media, energy, and industrials. Outstanding Performance Among a wide range of hedge funds trading a variety of strategies and asset classes, this year’s leading sub-strategies are healthcare-focused equity funds. It rose nearly 36% from the beginning of January to the end of November. Funds focused on Asian stock markets rose 19%, while funds focused on technology, media and communications stocks rose 17.5%. Elsewhere, event-driven funds that seek to profit from mispricing related to mergers, bankruptcies, acquisitions and other corporate catalysts are up 12.1% year-to-date. Multi-strategy managers grew by 9.2% over the same period. Meanwhile, PivotalPath’s Global Macro Index, which tracks strategies that use stocks, bonds, currencies, commodities and other assets to bet on macroeconomic and geopolitical trends, rose 8.6%. Overall, PivotalPath’s broader composite index, which measures the performance of 1,100 managers across strategies and geographies and provides an industry-wide snapshot of hedge fund returns, is up 10.8% year-to-date. However, PivotalPath warned that the correlation between hedge funds seeking to diversify their portfolios and the broader stock market remains at historically high levels and could “catch investors off guard” with an unwinding of the stock market. .GSPHC YTD Mountain S&P 500 Healthcare Sector. Michael Locke, CIO and co-CEO of Union Bancaire Privé’s wealth management group, emphasized that beyond positive industry-wide returns, 2025 will see continued dispersion across specific strategies and sectors. “While it is possible that sector-specific managers may outperform from time to time, 2025 is a great example of how diversification across styles and factors is key to portfolio construction and drawdown management,” Lock said in commentary for UBP. Solid Outlook PivotalPath highlighted the success of healthcare hedge funds and pointed to several themes supporting the sector’s strong performance, including an “arms race” in weight-loss drugs, Medicare price negotiations, and increasing pressure on big pharmaceutical companies facing the patent cliff and loss of exclusivity. “At the end of 2025, the healthcare industry will provide hedge funds with what they have been missing elsewhere: clean diversification,” PivotalPath said in its monthly report. He added that trial readings, label expansions, price headlines and acquisition rumors have defined winners and losers, creating fertile ground for idiosyncratic deals. “Management says the opportunity is clear; they have the differentiated science of multiple shots on goal in house, they fund frothy consensus stocks, and they pay attention to trade terms, as the tape is already telling funds that the market is willing to pay for a reliable asset,” Pivotal Pass said. Lenman & Partners Asset Management, a health care hedge fund that buys and sells pharmaceutical, biotech, medical technology and health care services companies in all market capitalizations around the world, is eyeing further upside. In his latest monthly performance report, Lenman pointed to an expanded IPO pipeline for 2026, as well as increased political and regulatory transparency. “Continued strong fundamentals and growth prospects, together with a positive trading environment and attractive valuations, support a strong position across the healthcare sector,” the Stockholm-based company said.
