Investors are showing increased optimism toward hedge funds, with a large majority planning new allocations during the second half of 2024, a trend fuelled by fresh capital inflows and the growing popularity of portable alpha strategies, according to a recent report by BNP Paribas.
The research, conducted by the BNP Paribas Capital Introduction team, surveyed 197 allocators across 15 countries who manage or advise on over $870bn in hedge fund assets. The findings reveal that equity strategies are taking centre stage for these investors with 61% of investors focusing on fundamental equity strategies.
Other areas of interest include credit and discretionary macro strategies, with over a third of investors looking to make allocations.
Overall, some 86% of investors are planning to make new hedge fund allocations in the second half of 2024, according to the study, with 26% of those set to deploy new capital, with the remaining investments coming from capital rotation
Some 74% of investors plan to allocate to the US, while 51% are targeting Europe. The Asia-Pacific (APAC) region is less favoured, with only 27% planning allocations, while China and India are of minimal interest at just 7% and 8%, respectively.
Over half of pension and sovereign wealth funds already have investments in portable alpha strategies, with the majority intending to increase their allocations, with fundamental equity remaining the most popular component for portable alpha among investors.
Marlin Naidoo, Global Head of Capital Introduction at BNP Paribas, commented, “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.”
