The “Sell America” trade is bleeding into the hedge fund world.
According to a new Barclays survey of 342 investors (managing $7.8 trillion), allocators are planning to decrease their exposure to US-based hedge funds by ~5% for the first time in three years. The catalyst? The geopolitical fallout from President Trump’s “Liberation Day” levies in April, which has prompted a search for diversification.
📉 THE SHIFT AWAY FROM THE US:
- Europe: US investor interest in European managers has doubled.
- Asia: Interest in APAC-based funds has doubled since the lows of 2024, with a 10% growth in allocation intent.
- The Sentiment: Investors are effectively looking to de-correlate their alpha from US policy risk.
📊 STRATEGIES IN VOGUE (2026): While big multi-managers continue to grow (17% CAGR to $435B), they are not the top strategy pick for new capital.
- #1 Pick for 2026: Equity Market Neutral.
- #2 Pick: Quant Multi-Strategy.
- The Trend: Investors are moving away from directional beta and toward uncorrelated, systematic returns.
💰 FEES & RETURNS: The power dynamic is shifting slightly back to LPs.
- Fee Structure: Investors’ share of gross returns has risen from 47% (2023) to 56%.
- Growth: The industry grew by over 20% between 2023–2025, marking the biggest jump since 2013.
💡 ANALYST TAKEAWAY: This is a defensive rotation. After years of the US outperforming everything, the “Liberation Day” levies have introduced enough structural uncertainty that allocators are finally looking abroad. The surge in interest for Equity Market Neutral confirms this: investors don’t want market direction; they want pure, uncorrelated skill—and for the first time in years, they think they are more likely to find it in London or Singapore than in New York.
👇 Allocators: Is the pivot to Europe/Asia a tactical hedge against US trade policy, or a long-term structural rebalancing?