Completed a turnaround through chip and AI trading; hedge funds achieve their best half-year performance since 2021.

```

After experiencing dramatic turbulence in the first quarter, the hedge fund industry completed a strong reversal, achieving its best first-half performance in five years thanks to semiconductor and artificial intelligence-related bets.

On Wednesday, Bloomberg cited data from research firm PivotalPath, reporting that as of June 30, 2026, hedge funds achieved an average return of 7.2% in the first half of this year, marking the strongest performance for the same period since 2021. Among them, hedge funds focused on technology stocks led the industry, with an average return as high as 27%. Marshall Wace's Eureka Fund gained 19.9% in the first half, while D.E. Shaw's macro strategy fund Oculus achieved an even higher return of 27.4% over the same period.

Chip stocks delivered their best quarterly performance in history this quarter, becoming the core engine driving the latest surge. Meanwhile, events such as the swift inclusion of SpaceX in the Nasdaq and FTSE Russell indices, along with other index adjustments, generated substantial profits for specific strategies. Millennium Management's two teams specializing in index change trades earned approximately $3.7 billion in June alone.

Behind the Reversal: Dual Drivers of Tech Bets and Index Trading

In the first half of this year, technology-themed bets and index rebalancing strategies became the two main sources of hedge funds' excess returns.

Whale Rock Capital Management emerged as the standout winner with a 72.5% gain in the first half, mainly due to holdings in semiconductor companies and bets on Anthropic PBC. Appaloosa Management achieved a 32% return, benefitting primarily from the memory chip sector—which surged this year due to soaring demand for AI computing power.

Trading opportunities from index adjustments are equally significant. The rapid inclusion of SpaceX into benchmark indices like Nasdaq and FTSE Russell created notable profits for funds specializing in index rebalancing. Millennium Management's two teams focused on such trades recorded approximately $3.7 billion in profits in June alone, significantly boosting the monthly performance of this multi-strategy hedge fund.

In March this year, the hedge fund industry faced a severe test. Military action by Iran effectively blocked shipping through the Strait of Hormuz, driving oil prices higher and fueling concerns about a return of inflation. Earlier, panic over the disruptive impact of AI triggered heavy sell-offs in software stocks, resulting in major losses for some hedge funds. However, as chip stocks rallied strongly, these shocks gradually faded from market memory. The first-half results from multiple firms indicate the industry as a whole has fully recovered from the March trough.

Consistent Solid Performance Rekindles Investor Enthusiasm

The appeal of hedge funds is rising, backed by steady performance in recent years and contrasted with investor disappointment in other alternative assets like private equity.

PivotalPath data shows hedge funds have achieved a compound annualized return of 8.5% since January 2020. Jon Caplis, PivotalPath's head, noted: "It is this consistency in performance that has led to renewed inflows into hedge funds, especially against a backdrop of issues in private equity and credit markets."

Despite impressive overall performance, internal divergence cannot be ignored.

Sources report that ExodusPoint Capital Management rose only 0.2% in June, lagging behind its multi-strategy peers, with cumulative gains of just 4.3% in the first half of the year. Meanwhile, quantitative hedge funds are experiencing their worst period since 2023, forming a sharp contrast to the robust performance of tech-themed funds.

Risk Disclosure and DisclaimerThe market has risks, and investment should be made cautiously. This article does not constitute personal investment advice and does not take into account individual users' special investment goals, financial status, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article fit their specific circumstances. Those who invest based on this article do so at their own risk. ```