Hedge fund assets on a positive path to reach US$5 trillion by 2029
After a period of stagnation, when investors questioned the value of ‘expensive’ hedge funds in their portfolio, they are now increasingly seeing them as a risk mitigation, diversification and liquidity tool, meaning sentiment towards the asset class remains strong.
Divergent global economic policies and the US deregulatory agenda are providing fertile ground for a range of hedge strategies.
March 2025 was a rare third consecutive month of net capital inflows, demonstrating the investor sentiment towards using the asset class as a key tool in their portfolios.
Multi-managers continue to grow in prominence as they become significant investors in other hedge funds. Blockbuster launches, funded by the largest multi-managers are re-shaping the industry. Despite the additional fee layer and access restrictions, investors still consider these firms as worthwhile investments as returns are high.
Recent performance has provided the uncorrelated returns sought through hedge funds. This has prompted many investors to increase and restructure their allocations, thus developing a risk mitigation sleeve. This has proved key in recent volatile markets and critical to those investors looking to increase this risk management approach going forward.
UK and Nordics are the most active European hedge allocators, reshaping their allocations for liquidity, resilience and diversification. Regional growth will be a top manager priority. The Middle East is a key region for expansion as the focus moves to family offices, alongside the sovereigns, looking for stable alpha accompanied by liquidity and institutional grade transparency.
Hedge funds are also becoming more popular across the private wealth space for their risk mitigation qualities. This includes a pickup of interest in registered fund vehicles, such as interval funds, for those without access to private funds.
This analysis covers the 3,019 SFOs covered in our platform as of January 2025 with a value of assets in excess of four and a half trillion dollars.
