Long-short equity hedge funds lead 2026 hedge fund outperformance

In the first half of 2026, global hedge funds delivered a 6% return, surpassing the S&P 60% Exposure benchmark, with long-short equity strategies taking the lead, according to Canoe Intelligence. The Canoe Total Hedge Fund Index, encompassing over 3,500 funds across various strategies, increased by 6% between June 2026. Long-short equity funds were the top performers, generating a 9% return during this period, contributing the most to the index's growth.

Equity strategies constitute 51% of the index. Credit strategies posted a 3% return in the first half, poised to outperform their full-year 2025 performance of 5%. However, private credit trailed the overall index by 4 percentage points in the first half, marking its largest relative shortfall since 2023. Performance dispersion among private credit managers was minimal, with most funds returning under 3% through June.

Canoe Intelligence noted that volatile bond markets created more opportunities for other credit strategies during this period. Multi-strategy and relative-value funds each delivered a 5% return in the first half, exceeding their historical averages. Event-driven and macro strategies trailed the benchmark. Mike Muniz, Canoe Intelligence's chief strategy officer, explained that H1 2026 was anything but linear, experiencing a sharp pullback in the spring followed by an equally sharp rebound.

He added that managers who protected capital during the market decline were not necessarily the same funds that captured the subsequent recovery, highlighting the importance of analyzing individual fund performance rather than relying on aggregate estimates for institutional allocators.