The Hedge Fund That Beat the Market in Q1 2025—Here’s How

In a quarter marked by market turmoil and widespread losses, one hedge fund emerged as the biggest winner of Q1 2025. AQR Capital Management defied the downturn, delivering nearly 10% returns while major equity markets struggled.

With hedge fund performance often shrouded in secrecy, what made AQR’s Delphi Long-Short Equity Strategy stand out? And does this mean hedge funds are still worth considering in 2025? Let’s dive in.

AQR Capital: Defying the Market Downturn

Hedge funds operate in a complex space where performance data is often delayed or incomplete, but AQR Capital’s latest results are hard to ignore. The firm’s Delphi Long-Short Equity Strategy, a fund that balances long and short positions, achieved an impressive 9.7% return in Q1 2025, according to an April 1 report from CNBC.

While the fund’s official profile on AQR’s website logs its year-to-date (YTD) performance at 8.74%, the discrepancy could indicate a sharp one-day loss by April 2—or a simple data lag. Regardless, in a quarter where markets tumbled, a near 10% gain is a remarkable feat.

Another Q1 Standout: EDL Capital’s 17% Surge

AQR wasn’t the only hedge fund defying market expectations. EDL Capital, known for its global macro strategy, posted an astonishing 17% return by March 11, 2025.

Unlike stock-heavy funds, EDL focuses on tracking macroeconomic trends and trading currencies and bonds accordingly. This approach allowed it to sidestep the Q1 stock market volatility, positioning it among the best-performing hedge funds of the year so far.

Are Hedge Funds Still Worth It in 2025?

Despite AQR and EDL’s standout performances, hedge funds continue to face scrutiny in 2025. The biggest concern? High fees and underperformance.

Many hedge funds struggled this quarter, especially as the U.S. tech sector spearheaded a massive sell-off in early March. According to Reuters, some hedge funds lost nearly 50% of their gains by March 7 as the sell-off intensified.

Then there’s the infamous hedge fund fee structure—a standard “2 and 20” model, which means:

• 2% of total assets under management (AUM) is taken annually as a management fee.
  
• 20% of the profits go to the hedge fund itself.
  

This structure can eat into investor returns, making it harder to justify hedge funds when many active managers underperform the market.

The Verdict: Hedge Funds vs. Traditional Investing

The success of AQR and EDL Capital proves that some hedge funds can still deliver outsized returns—but they remain a high-risk, high-cost investment.

For everyday investors, the question is whether the potential gains are worth the steep fees and unpredictability. While hedge funds like AQR’s Delphi strategy thrived in Q1, the broader hedge fund industry continues to struggle with volatility and skepticism.

As we move into Q2, one thing is clear: only the smartest strategies will survive this unpredictable market.