CANOE 2026 HEDGE FUND PERFORMANCE REPORT:

The VIP Index: Performance Data Most Benchmarks Miss

 

About Canoe’s Hedge Fund VIP Index

The Canoe Hedge Fund VIP Index was built to answer a question traditional databases cannot: how have the largest, most established hedge funds performed relative to the rest of the hedge fund universe?

Most hedge fund benchmarks are constructed from voluntary manager submissions. The funds most likely to report are those actively raising capital. The funds least likely to report are the largest and most successful ones, with no marketing incentive and every reason to keep performance private. The result is an index shaped more by who participates than by where institutional capital actually sits. This is contribution bias, and it systematically skews published benchmarks toward smaller, fundraising-mode managers.

The implication is significant. The funds that dominate institutional hedge fund allocations, the multi-manager platforms, the quant giants, the global macro legends managing tens to hundreds of billions, are largely absent from conventional benchmarks. Allocators making decisions about these managers have had no credible, aggregated performance reference point. Until now, the only way to benchmark a portfolio heavily allocated to the largest funds was to approximate from incomplete data or rely on what managers chose to share directly.

Canoe’s position changes that. Our platform processes performance data directly from capital account statements, investor letters, and fund reports as GPs report to LPs across 500+ institutional clients and 18,000+ LPs. Performance in this index is calculated from actual LP balances and transactions, net of all fees. Not from what managers choose to publish. Every fund carries a complete monthly return series, verified individually, with any fund missing data for a given period excluded entirely. 

The result is a contribution-bias-free index covering the 100 largest hedge funds by AUM, representing approximately $3.2 trillion in institutional allocations as of 2026. The managers in this universe average an estimated $28 billion in hedge fund AUM and span the full spectrum of institutional hedge fund strategies: multi-manager platforms, quantitative funds, global macro, equity long/short, and relative value and arbitrage. It is, in practical terms, a cross-section of the firms that define the industry.

Note: AUM figures represent estimates sourced from publicly available information across various dates and should be considered approximations.

This index does not exist anywhere else because the world’s largest funds do not report their performance to traditional data aggregators voluntarily. The data we gather is distributed across thousands of LP documents as part of mandatory LP reporting. Canoe is the first platform with the network and scale to aggregate it and analyze it.

Monthly VAMI (Value Added Monthly Index) indices represent fund-weighted performance, calculated from actual balances and transactions, not survey submissions. All figures cover the period January 2023 through June 2026.

FINDING #1: 

The largest hedge funds trail on return, lead of risk-adjusted return

What the data shows:

The Total Canoe Hedge Fund VIP Index, returned 10.5% annualized or 41.8% cumulative, from January 2023 through June of this year. In the first half of 2026, the VIP index returned 6.0% compared to the 6.2% benchmark and 7% Hedge Fund total Index. The VIP Index trailed the broader hedge fund index by 76 basis points annualized, and both indices underperformed the S&P 500 (at 60% exposure) on an absolute basis since 2023. On a risk-adjusted basis, however, the outcome was different:

Three-Year Sharpe Ratios (assuming a 4% risk-free rate):

• S&P 500 at 60% Exposure: 1.21 
• HF Index: 1.34
• HF VIP: 1.47

The VIP index achieved a higher risk-adjusted return than both the exposure-adjusted benchmark and the broad HF index for the tracked period. 

Maximum drawdown is another measure of risk and represents the total loss from highest peak to trough. Over the period analyzed, the VIP funds drew down a maximum of 3.2% compared to 3.3% for the total HF index and 5.0% for the adjusted S&P benchmark.

However, the recent drawdowns appeared to catch both the VIPs and the rest of the hedge funds in our coverage universe flat-footed.

While most of the analyzed history shows managers protecting relatively well against severe drawdowns, the pullback the markets experienced in March of this year was different. Driven by an energy shock from the Iran war, the unexpected volatility saw managers draw down in line with the benchmark. Even VIPs failed to protect capital as they normally do, drawing down just a few basis points less than their smaller counterparts. This can be seen on the chart above, as the most recent drawdowns affected VIPs almost identically to the rest of the managers. 

 

Why this matters:

Institutional investors optimize for risk-adjusted performance, capital preservation, and portfolio stability, especially during turbulent markets. The VIP Index reflects what allocators have experienced with their largest managers: competitive returns with considerably less volatility than the broader universe over the long term. 

This is why March 2026 was such a notable exception for many managers, especially for the VIPs. Importantly, VIPs staged a strong rebound from the spring trough, especially the managers running LSEQ strategies. 

 

FINDING #2: 

Large Long/Short Equity Funds have led smaller peers every full year since 2023

VIPs running Long Short Equity strategies have had a strong run since 2023 and continue to outperform their smaller peers in absolute terms, beating the overall index, smaller equity funds, and the benchmark in total performance. 

LSEQ VIP funds have outperformed their smaller peers every year since the start of the analysis in 2023. Last year, the outperformance was a full 5 percentage points. This year, despite a tough March, the VIP LSEQ funds are already up 9.2% on average through the end of June, handily beating the exposure-adjusted benchmark but tracking closely to their smaller peers.

 

Why this matters:

There is a prevailing view among allocators that smaller funds tend to outperform their larger peers over the long term. While this may be true in some periods, our data suggests the opposite with LSEQ funds over the period we have analyzed. The VIP funds are in line with the rest of the LSEQ universe for 2026 but have outperformed them last year and the years prior. 

Why do these findings differ from other industry studies that find smaller managers often outperform? In our data, we use averages (not medians), and the averages are affected by negative outliers in the LSEQ universe. While traditional performance databases often capture the positive outliers, they mostly miss the negative outliers, as managers tend to not report outsized losses to databases with voluntary reporting. Because we capture all performance regardless of managers’ willingness to share it, our data has both negative and positive outliers. In finding #4, we note that not all strategies tend to favor the largest players, as we observed the opposite relationship with RV strategies, where size can hinder the ability to move quickly and limit participation in some opportunities.

 

FINDING #3: 

Multi-Manager Platforms dipped in March, and rebounded in April

What the data shows:

Over the past three years, multi-manager platforms have shown to be effective at capital preservation, navigating market volatility with minimal drawdowns and quick recoveries. The group did draw down 1.25% in March of this year (largest draw in three years), but they quickly recovered with the rest of the HF universe.

This recent drawdown was challenging for hedge funds, even the largest ones and those running multiple pod platforms.

• October 2023 Drawdown: S&P 500 Adj. BM: -5.0% | HF VIP Index: -3.0% | Multi-Manager VIP: 0.0% (No drawdown)
• April 2025 Drawdown: S&P 500 Adj. BM: -4.5% | HF VIP Index: -2.7% | Multi-Manager VIP: -0.5%
• March 2026 Drawdown: S&P 500 Adj. BM: -3.4% | HF VIP Index: -3.2% | Multi-Manager VIP: -1.3%

In March, 90% of the platforms we track were down, but in April, all but one were up and on their way to recovery. 

 

Why this matters:

Large multi-manager platforms have built robust risk mitigation strategies to better absorb sector-level or strategy-level dislocations without material portfolio impact. Part of the strategy is to diversify risk across dozens of different independent teams, or pods. Each pod carries a different return profile and a unique relationship to broader market volatility. Because platforms tend to dynamically shift capital toward what’s working, gains and losses across pods work to partially cancel each other out. Only when conditions deteriorate sharply enough to move all pods in the same direction simultaneously does the index draw down at all. For allocators whose primary mandate includes capital protection, this is exactly the behavior the data validates. Even when these platforms do draw down, the downside is contained. 

 

FINDING #4: 

In Relative Value, smaller funds keep the edge on return

What the data shows:

We have noted in our prior reports that some strategies tend to favor smaller, more nimble managers over their larger counterparts. The Relative Value and Arbitrage strategies are the one segment where smaller funds again outperformed their larger counterparts on an absolute basis and recently the smaller managers have further widened that gap above their larger peers: 

• Overall
  • VIP RV/ARB: 7.0% return, 1.8% annualized volatility
  • Broad RV Index: 8.5% return, 2.8% annualized volatility  
• 2026 through June
  • VIP RV/ARB: 2.9% return
  • Broad RV Index: 5.4% return

The VIP RV funds produced lower returns historically and lagged smaller funds by 2.5 percentage points just this year. Smaller funds captured more of the upside while, admittedly, accepting more volatility to do it.

 

Why this matters:

Relative value and arbitrage strategies are looking for temporary market dislocations and fundamentally favor speed and agility. These strategies exploit fleeting pricing inefficiencies that can close in hours or days or are simply too small to take large amounts of capital. Executing at scale and quickly enough to capture those opportunities becomes structurally challenging. Larger positions can impact the market and more complex approval chains slow decision-making as fleeting opportunities are arbitraged by smaller players. The data implies that for this strategy type specifically, a leaner fund can outmaneuver a larger one. We have seen that the VIP LSEQ funds tend to outperform their smaller peers in our dataset but allocators evaluating RV exposure may find the opposite: the smaller funds can deliver a higher return profile.

 

Conclusion: What the VIP Index tells you that no other source can

The hedge fund indices published by traditional data aggregators reflect the funds that choose to be visible. The Canoe VIP Index reflects the funds that actually move institutional capital.

These are different datasets, with different implications.

Across three years and approximately $3.2 trillion in institutional allocations, is a coherent picture of how the world’s largest hedge funds have actually performed. Returns in line with the broader universe. Meaningfully lower volatility. Superior capital protection in stress periods. And a nuanced divergence by strategy, where scale amplifies advantages in multi-manager structures but constrains returns in relative value and arbitrage.

For allocators focused on manager selection, portfolio construction, or hedge fund exposure sizing, these findings offer a baseline that hasn’t previously been available. Not because the data didn’t exist, but because it was distributed across thousands of LP documents that no one had aggregated.

Canoe now has. And we will update this analysis quarterly as the next chapter of hedge fund performance unfolds.

A note on methodology: The fund universe reflects actual institutional allocations and is subject to both selection and survivorship bias. Selection bias, the tendency for institutional portfolios to favor established, higher-quality managers, is the dominant factor. Survivorship bias, where underperforming funds may have liquidated over the period, is also present to a degree. This means the index likely reflects better-than-average hedge fund performance rather than a pure industry average. However, this characteristic also makes it more representative of the actual returns experienced by institutional allocators, which is the relevant benchmark for most users of this data.

 

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About Canoe Intelligence

Canoe Intelligence (“Canoe”), a Bloomberg company,  is the intelligence infrastructure powering how the world invests in alts. Our AI-native platform automates the manual data processing, cutting operational costs and risk while future-proofing alts infrastructure for long-term growth. Timely, accurate, and comprehensive data arms investment teams to act with the decisiveness of public markets. With Canoe, it’s all about making Alts, smarter.

Learn more at www.canoeintelligence.com.