Key Takeaways
- • Global hedge fund assets rose a record $409 billion in Q2 2026 to $5.6 trillion, according to Hedge Fund Research (HFR).
- • Swiss private bank UBP said the share of hedge-fund-only mandates among its Asia-based discretionary clients more than tripled since end-2024, though it did not disclose underlying figures.
- • The HFR global hedge fund index gained 12.4% in 2025, its third consecutive annual gain and strongest since 2009, and is up a further 7% year to date, versus roughly 36% for MSCI World since end-2024 and a 7% decline for the FTSE World Government Bond Index total return measure.
- • Indonesia's Danantara Investment Management is targeting a 5% hedge fund allocation, while Marsh said some institutions are considering allocations near 10%, particularly to multi-strategy funds.
- • Acadian Asset Management, which manages $233 billion, has seen its Asian assets grow fourfold over four years, with CEO Kelly Young describing investor interest as the strongest in about two decades.
Summary
Asian institutional and private wealth investors are increasing allocations to hedge funds as government bonds lose effectiveness as portfolio diversifiers, according to reporting that draws on Reuters and agency inputs. Global hedge fund assets rose by a record $409 billion in the second quarter of 2026 to reach $5.6 trillion, per Hedge Fund Research (HFR). Swiss private bank UBP said hedge-fund-only mandates among its Asia-based discretionary portfolio management clients had more than tripled since the end of 2024, although it did not disclose the underlying figures. Paras Gupta, head of discretionary portfolio management for Asia at UBP, said US Treasuries and other government bonds had become less reliable diversifiers in recent years.
Hedge fund performance has held up relative to traditional assets. The HFR global hedge fund index gained 12.4% in 2025, its third consecutive annual increase and strongest year since 2009, and has risen a further 7% year to date. Over the same period, the MSCI World Index has gained around 36% since the end of 2024, while the FTSE World Government Bond Index's total return measure has declined 7%, according to figures cited by Reuters. The shift challenges the conventional 60/40 equity-bond portfolio and puts pressure on long-only managers whose performance has faced scrutiny during market turbulence.
Institutional demand is broadening. Indonesia's sovereign investment platform Danantara Investment Management is targeting a 5% hedge fund allocation, with Rani Piputri, senior director of public investment, saying the goal is more stable returns and limited losses in downturns. Niall O'Sullivan, global CIO at Marsh, said some institutions that previously avoided hedge funds are considering allocations of around 10%, particularly to multi-strategy funds with low correlation to broader markets. Adeline Tan, head of investments at Marsh Asia, told Reuters that interest is rising among wealth managers, family offices and defined-benefit pension funds in Japan, where weakening bond diversification has become a concern.
Managers are also pointing to dispersion in markets driven by artificial intelligence, geopolitics and diverging regional growth as a source of opportunity for long-short strategies. DBS Bank's Daryl Ho cited the divergence between semiconductor and software stocks and US outperformance relative to other regions. J.P. Morgan Private Bank's Albert Yang said investors increasingly view hedge funds as a long-term allocation for managing volatility, and that concerns about concentrated AI-related equity exposure have contributed to demand. Yang added that hedge funds are being used to complement conventional portfolios, while noting that performance varies significantly across managers.
Multi-strategy, macro and quantitative managers are among the main beneficiaries. Acadian Asset Management, a systematic manager overseeing $233 billion, has recorded a fourfold increase in Asian assets over four years, according to Reuters. CEO Kelly Young said the firm is seeing its strongest investor interest in about two decades. Reporting indicates the expansion of hedge fund allocations does not necessarily mean investors are abandoning traditional equities and bonds.
Hedge fund performance has held up relative to traditional assets. The HFR global hedge fund index gained 12.4% in 2025, its third consecutive annual increase and strongest year since 2009, and has risen a further 7% year to date. Over the same period, the MSCI World Index has gained around 36% since the end of 2024, while the FTSE World Government Bond Index's total return measure has declined 7%, according to figures cited by Reuters. The shift challenges the conventional 60/40 equity-bond portfolio and puts pressure on long-only managers whose performance has faced scrutiny during market turbulence.
Institutional demand is broadening. Indonesia's sovereign investment platform Danantara Investment Management is targeting a 5% hedge fund allocation, with Rani Piputri, senior director of public investment, saying the goal is more stable returns and limited losses in downturns. Niall O'Sullivan, global CIO at Marsh, said some institutions that previously avoided hedge funds are considering allocations of around 10%, particularly to multi-strategy funds with low correlation to broader markets. Adeline Tan, head of investments at Marsh Asia, told Reuters that interest is rising among wealth managers, family offices and defined-benefit pension funds in Japan, where weakening bond diversification has become a concern.
Managers are also pointing to dispersion in markets driven by artificial intelligence, geopolitics and diverging regional growth as a source of opportunity for long-short strategies. DBS Bank's Daryl Ho cited the divergence between semiconductor and software stocks and US outperformance relative to other regions. J.P. Morgan Private Bank's Albert Yang said investors increasingly view hedge funds as a long-term allocation for managing volatility, and that concerns about concentrated AI-related equity exposure have contributed to demand. Yang added that hedge funds are being used to complement conventional portfolios, while noting that performance varies significantly across managers.
Multi-strategy, macro and quantitative managers are among the main beneficiaries. Acadian Asset Management, a systematic manager overseeing $233 billion, has recorded a fourfold increase in Asian assets over four years, according to Reuters. CEO Kelly Young said the firm is seeing its strongest investor interest in about two decades. Reporting indicates the expansion of hedge fund allocations does not necessarily mean investors are abandoning traditional equities and bonds.
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