2. Which hedge fund strategies are attracting the most investor interest?
Over the last 12 months, nearly every hedge fund strategy generated returns and alpha above its respective five-year annualised average. Quant Equity was the exception, although it delivered the strongest results over the last five years.
Discretionary Equity has led recent performance, returning 22.1% over the last 12 months and generating 10.6% alpha — around 460 bps above the HF AUM Weighted Index.
The longer-term performance picture highlights the success of systematic hedge fund investment strategies. Quant Equity not only delivered the highest five-year annualised returns among the strategies, but also ranked first for five-year alpha, at 6.6%, almost 300 bps ahead of the next highest strategy over the same period.
While recent performance plays a role, hedge fund investor allocation plans for the second half of 2026 point to a clear preference for diversifying strategies. Most notably, four of the five most sought-after hedge fund investment strategies for the balance of 2026 have low equity beta, led by Equity Market Neutral at 29%, Global Macro at 27%, Quant Multi-Strat at 23% and Equity Stat Arb at 19%. Investors also remain interested in Equity Sector Long/Short, the only directional strategy in the top five (+24%).
Among larger investors with more hedge fund assets under management (AUM), Global Macro appears particularly well placed to attract incremental investor allocations. The pattern points to a clear preference for lower-beta, differentiated return streams.