Hedge Funds Performed Better in Higher Rate Environments

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Hedge Funds Performed Better in Higher Rate Environments

Hedge fund strategy performance in different risk-free rate environments

What is this chart showing?

  • This chart illustratively shows hedge fund baseline returns that are greater in a higher interest rate environment.
  • Hedge funds, specifically macro strategies, have generally performed far better during periods of higher interest rates and market volatility.

Why is it important?

  • Historically, market environments with volatility, asset mispricing, and macroeconomic and geopolitical uncertainty have created an opportunity-rich environment for fund managers specializing in shifting market conditions across stock, bond, currency, and commodity markets.
  • Macro hedge funds have delivered positive performance when traditional assets appreciated and provided downside protection when they depreciated.
  • Elevated rates portend more opportunities for all hedge funds, and most notably the more diversifying strategies such as global macro.


Source: iCapital, Blackrock, Hedge Fund Opportunities in a Rising Rates and Uncertain Market Environment, August 2023. Data from Morningstar, median index returns from Jan. 1, 1994 to June 30, 2023. Hedge Funds are represented by the Credit Suisse Hedge Fund Index, Event-Driven by the Credit Suisse Event-Driven Index, Long/Short Equity by the Credit Suisse Long/Short Equity Index, Global Macro by the Credit Suisse Global Macro Index, and Multi-Strategy by the Credit Suisse Multi Strategy Index. For illustrative purposes only. This is not intended to be an offer or solicitation to employ a specific investment strategy. Past performance is not indicative of future results. Future results are not guaranteed.