Hedge funds are once again drawing significant institutional capital as investor appetite for private equity and private credit cools amid a tougher fundraising environment and limited liquidity, according to a report by Bloomberg, citing data from JPMorgan,
According to the bank, hedge funds attracted $37bn in inflows during the first half of 2025, marking the strongest momentum the industry has seen in over a decade. In Q2 alone, hedge funds brought in $25bn, their largest quarterly inflow since 2014. Multi-strategy giants with over $5bn in assets under management continue to dominate, benefiting from their scale, agility, and more liquid investment approach.
This marks a stark contrast with private markets, which had previously been Wall Street’s top destinations for capital. Private equity fundraising dropped 35% year-on-year in Q1, while private credit is on track for its weakest annual total since at least 2018. Deal exits remain clogged, distributions are slow, and capital calls are outpacing returns — prompting allocators to rethink their exposure.
Data from BNP Paribas backs this shift, with allocators saying they reallocated around $20bn into hedge funds in 2024, a third of which came directly from private market investments. Nearly two-thirds of those surveyed plan to increase hedge fund allocations further.
