Hedge fund allocators are shifting their focus to European markets in the second half of 2025, marking a notable turn away from the United States amid persistent trade tensions and political uncertainty, according to a report by Bloomberg citing Goldman Sachs’ mid-year Capital Introduction survey.
In the poll of 333 investors managing over $1tn in hedge fund allocations, Europe emerged as the most favoured geographic region for new capital – the first time the continent has topped the list since the survey began in 2018. In contrast, interest in North American exposure has faded sharply, Goldman’s prime brokerage team said in a note.
According to the survey, 28% of respondents plan to increase exposure to European assets, while only 2% intend to reduce European exposure.
Views on North America meanwhile, were split, with investors evenly divided on increasing or decreasing allocations.
The pivot comes as European equities outperformed US peers in H1, buoyed by unexpected fiscal stimulus measures and renewed defence spending, particularly in Germany and France. Meanwhile, US markets were roiled by escalating trade frictions, soft economic data, and a pullback in AI-led growth momentum that had previously driven equity returns.
The survey’s findings align with recent data from Bank of America’s June fund manager poll, which showed a net 34% overweight in euro-area equities, compared with a 36% underweight in US stocks. Notably, over 50% of respondents in that survey saw international equities as the most attractive asset class for the next five years, while just 23% favoured the US.
Despite this, a recent rebound in US growth stocks – particularly those tied to artificial intelligence – has narrowed the performance gap. Both the Stoxx Europe 600 and the S&P 500 are up roughly 6% year-to-date in local currencies, according to Goldman.
