According to the Goldman Sachs' Prime Brokerage December report, global equity markets finished the month with varying performance. Investors analyzed both the economic signals and decisions made by central banks and made portfolio adjustments.
December was also the seventh consecutive positive month for the S&P 500, bringing in 0.1% and finishing the year with 17.9%. The Fed trimmed interest rates for the third time in 2025, while inflation slowed, and the labor market showed signs of cooling. Following the rate cut, U.S. Treasury yields steepened. Short-term yields fell, while long-term yields rose.
International equity markets, especially in Europe and Asia, benefited from the weakening U.S. dollar. Looking at commodities, precious metals, with gold as a frontrunner, continued its surge, while oil slightly dropped. All in all, markets closed the year in December steady. The markets are uncertain about 2026, but are showing signs of optimism about the economic outlook.
Hedge Fund Performance
Also see: Multi-Strategy Funds AUM Reaches New All-Time High Amid Solid 2025 Returns
With a 1.4% gain in December, the average hedge fund's 2025 returns rose to 13.3%. MSCI World TR finished with 21.1%, while the top performers were Hang Seng and Nikkei 225 with 27.8% and 26.2% respectively. Fundamental equity long/short strategy performed the best, while for the second year in a row, all strategies reported positive returns. Primary performance driver for the Fundamental equity long/short strategy was long book gains, with the strategy netting 8.5% positive alpha during the year.
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