Multi-strategy hedge funds are expected to remain the fastest-growing segment of the industry into 2026, as managers continue to attract strong inflows and deliver robust performance, according to new research published by global fund administrator Citco in collaboration with Alternative Fund Insight (AFI).
Citco’s Multi-Strategy Outlook 2026, based on a survey of 100 senior hedge fund industry participants, found that 86% of respondents expect multi-strategy platforms to continue outpacing other hedge fund strategies in terms of growth over the coming year. The findings come amid sustained allocator demand for diversified, risk-controlled investment approaches capable of generating consistent returns at scale.
The report highlights another strong year for the segment in 2025, with multi-strategy funds delivering a weighted average return of 22.7% and attracting $53.4bn of net inflows. According to Citco, those inflows accounted for the majority of hedge fund capital tracked during the year, underlining the growing dominance of large, institutional multi-manager platforms.
As assets scale rapidly, however, the survey points to a shifting focus among managers from pure performance to operational resilience. Respondents identified operational complexity, risk management and recruitment as the three most significant challenges facing multi-strategy platforms today. Increasingly intricate structures – spanning multiple legal entities, asset classes and trading strategies – are placing greater demands on infrastructure and governance frameworks, the report noted.
Risk management was highlighted as a defining pillar of the multi-strategy model, with respondents stressing the need for continuous oversight as platforms expand. At the same time, recruitment remains a key pressure point, with competition for portfolio managers and trading talent driving up costs and adding friction to efficient scaling.
Against this backdrop, the shift towards outsourcing is expected to accelerate. Middle-office functions such as reconciliation, treasury and collateral management were identified as the most likely areas for externalisation, as managers look to specialist providers to support growth while maintaining control over costs and risk.
The report also points to widespread adoption of artificial intelligence across the hedge fund operating model. Around two-thirds of respondents expect AI tools to be embedded across front, middle and back office functions, with middle-office applications seen as the most immediate use case. AI is increasingly viewed as a way to manage operational load, improve efficiency and support decision-making as multi-strategy platforms continue to scale.
Taken together, the findings suggest that while performance remains critical, the next phase of growth for multi-strategy hedge funds will be defined by the strength of their operating models. As assets approach the trillion-dollar mark globally, operational discipline, robust risk controls and scalable infrastructure are emerging as key differentiators alongside returns.
