By Nell Mackenzie, Ateev Bhandari and Anirban Sen NEW YORK, Jan 2 (Reuters) – Large multi-manager funds, including D.E. Shaw, Balyasny Asset Management, Bridgewater Associates, and Point72 Asset Management, generated mostly double-digit gains in 2025, reflecting an upbeat year for the hedge fund industry that was buoyed by an AI-powered stock market rally. D.E. Shaw's two flagship funds produced double-digit returns, a source familiar with the matter told Reuters on Friday, reflecting similar gains seen across top multi-strategy peers during a year of record volatility. The firm's Oculus Fund generated a net return of around 28.2% for the year and has made a net annualized return of 14.4% since its founding in 2004, the source said. D.E. Shaw's Composite Fund, which is its largest multi-strategy fund, generated a net return of around 18.5%, with an annualized net return of 12.9% since its inception in 2001, the person said. Founded in 1988, D.E. Shaw managed more than $85 billion as of December 1 across hedge funds, private markets, multi-asset-class and active equity investment strategies. Balyasny, which was co-founded in 2001 by Dmitry Balyasny, delivered gains of 16.7% during the year, while Steve Cohen's Point72 produced a return of 16.5%, according to two people familiar with the matter. BUMPER YEAR FOR TOP FUNDS Top multi-manager funds broadly enjoyed healthy gains last year, helped mainly by a strong performance from the U.S. stock market that has been lifted by euphoria around artificial intelligence-focused stocks. Fund managers also have benefited from U.S. President Donald Trump's trade wars that triggered volatility in bond and currency markets. Large global macro hedge funds typically invest in stocks, bonds, currencies and commodities. "Overall, it has been a strong year for hedge funds across strategies, with decent alpha generation and recognition from allocators," said Vanessa Bogaardt, global head of capital introduction, prime financing at Bank of America. "Hedge fund assets are at all-time highs, supported by net inflows into the industry. Allocator sentiment toward hedge funds remains positive, and we see plenty of opportunities to explore in 2026,” she added. The benchmark S&P 500 index rose about 16% last year, as it went from record highs in mid-February, to near bear-market lows in early April, and then to fresh record highs in December. The volatility – fueled largely by Trump's whiplash trade, fiscal and geopolitical policies – helped trading desks across Wall Street reap profits, as active portfolio shuffling created price arbitrage. Bridgewater Associates, founded by billionaire Ray Dalio and currently led by CEO Nir Bar Dea, posted the highest profits in its 50-year history. Its flagship Pure Alpha fund surged 34% in 2025 to lead the pack of top multi-strategy funds that operate so-called pod shops, which refer to teams of traders who oversee multiple asset classes including stocks, commodities, and bonds. Billionaire investor Cliff Asness' AQR Capital Management made annual gains of 19.6% in its multi-strategy Apex Strategy and 18.6% in its alternative trend-following Helix Strategy, another source told Reuters on Friday. Some top firms including Millennium and Citadel, however, lagged their largest peers, after being weighed down during the first half of the year by Trump administration trade policies. Millennium gained 10.5% during the year, while Citadel's flagship Wellington fund posted a 10.2% return, according to two sources familiar with the matter. Citadel's long-term annualized net return since its inception in 1990 stood at about 19%, one of the sources said. (Reporting by Ateev Bhandari in Bengaluru and Nell Mackenzie in London, additional reporting by Svea Herbst-Bayliss; Editing by Vijay Kishore and Bill Berkrot)
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