(HedgeCo.Net) The world’s biggest multi-strategy hedge funds are coming off one of their best months of the year and quietly taking some chips off the table. Firms such as Millennium Management, Citadel and Point72 posted solid gains in October, helped by bond market volatility and dispersion in equities, according to recent performance data compiled by industry outlets. Business Insider
That winning streak has come against a backdrop of elevated leverage across the industry. The Federal Reserve’s latest Financial Stability Report flagged hedge funds’ use of leverage as being near the top of its historical range, particularly in Treasury futures, interest-rate derivatives and equities. Federal Reserve With the 10-year U.S. Treasury yield hovering just above 4%, many funds are re-examining how much duration and basis-trade risk they’re willing to run into year-end. ETF Database
Traders say the big multi-manager “pods” are rotating toward more market-neutral positioning after a strong run. Gross exposures in some equity books have been trimmed, with portfolio managers encouraged to focus on idiosyncratic stock picking and relative-value trades instead of big directional macro calls. That shift mirrors broader futures data showing investors moving toward more neutral net positions around the next Fed meeting. Bloomberg+1
At the same time, firms are still bidding aggressively for top talent. Even portfolio managers coming off weaker years remain hot commodities as platforms compete to seed new teams and strategies, a trend highlighted by recent reports on hiring at Millennium, Citadel and Point72. Bloomberg The message to investors is clear: the platforms believe the opportunity set in dispersion, volatility and cross-asset relative value remains rich – but they want that risk managed across dozens of tightly hedged books rather than a few big directional bets.
For allocators, the takeaway is that the largest hedge funds are entering the final weeks of 2025 from a position of strength, but also with a heightened focus on risk control. Expect more emphasis on liquidity, tighter stop-loss disciplines and a continued preference for diversified multi-strategy portfolios over niche, concentrated funds.
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