Hedge fund investors are heading into H2 2026 on the back of strong returns and with plans to up allocations, with equity long-short, discretionary macro and equity market neutral strategies among those attracting the greatest interest, according to BNP Paribas.
The findings come from BNP Paribas Capital Introduction’s latest allocator survey, which canvassed 175 investors across 18 countries representing approximately $1.2tn in hedge fund assets.
Allocators reported an average hedge fund portfolio return of 7.46% during the first half of the year, well ahead of the 4.80% average target for the period and putting portfolios on course to surpass the 9.60% average return target for the full year.
The BNP Paribas All Funds Aggregate Index recorded a 7.35% asset-weighted gain over the same period, compared with a 6.02% fund-weighted return.
Equity long-short was among the strongest-performing strategies, generating a 9.15% fund-weighted return and a 12.58% asset-weighted gain. Convertible trading and multi-strategy funds each returned 8.03% on an asset-weighted basis, while quant macro produced a 7.13% fund-weighted return.
Credit was the weakest-performing major strategy, returning 3.03% on an asset-weighted basis.
Systematic strategies have also continued to demonstrate strong longer-term performance, with CTA funds generating around 7% of alpha over the 12 months through June, while quant multi-strategy funds delivered approximately 7% alpha over both three- and five-year periods.
Strong performance has been accompanied by a significant acceleration in investor allocations. Hedge funds attracted $26.8bn of net new capital during the first half, more than twice the $10.8bn recorded during the corresponding period of 2025.
Allocators expect the positive trend to continue, forecasting a further $24.9bn of net hedge fund inflows during the second half of the year. New capital was identified as the primary source of inflows by 38% of respondents.
Equity long-short remained the most sought-after strategy for the second half, with 35% of respondents planning to increase allocations. Discretionary macro was next at 29%, followed by equity market neutral at 25% and quant equity at 24%.
The regional outlook is similarly constructive. Asia-Pacific and Europe saw the highest proportion of allocators increasing exposure during the first half, at 41% and 32% respectively. For the second half, Europe leads planned allocation increases at 49%, closely followed by APAC at 48%, while 42% of respondents expect to increase their North American hedge fund exposure.
Interest in China has also strengthened, with 12% of allocators increasing allocations during the first half, up from 6% in the same period last year. Japan is also attracting greater attention, with 28% of respondents planning to increase exposure during the second half.
The survey also points to continued demand for alternative UCITS products. These strategies generated an average 4.36% return during the first half, while net inflows reached approximately $1.2bn. Investors expect another $1bn of net inflows during the second half, with equity long/short remaining the most popular strategy within the format.
