Investors Bullish on Hedge Funds 

Investors are increasingly optimistic about hedge funds, with the vast majority planning new allocations in the second half of 2024, fueled by new capital inflows and the growing popularity of portable alpha strategies, according to a report by BNP Paribas. 

According to the study, 86% of investors intend to allocate new capital to hedge funds. Of this group, 26% intend to deploy new capital, while the remaining investments will be derived from capital rotation. 

Equity strategies are the primary focus of investors, with 61% of them concentrating on fundamental strategies. Credit and discretionary macro strategies are also areas of interest, with 37% of investors intending to allocate funds. 

In addition, 74% of investors indicated that they intend to allocate funds to U.S. assets, while 51% indicated that they will allocate funds to European assets. Only 27% of respondents indicated that they would allocate resources to the Asia-Pacific region. 

Most pension and sovereign wealth funds intend to increase their allocations to portable alpha strategies, with fundamental equity remaining the most popular component among investors. Currently, over half of these funds have investments in portable alpha strategies. 

“Investors are turning to hedge funds in response to today’s volatile markets. Our survey highlights a clear trend toward increased inflows, with investors increasingly adopting portable alpha strategies to navigate uncertainty,” said Marlin Naidoo, global head of capital introduction at BNP Paribas. 

The research, conducted by the BNP Paribas Capital Introduction team, surveyed 197 allocators across 15 countries who manage or advise on more than $870 billion in hedge fund assets.