Hedge fund managers have raised more capital than planned at the start of the year for the first time in 3 years, according to a Bank of America survey of 321 asset allocators overseeing ~$1 trillion in hedge fund assets.
📌 Key Takeaways & Important Metrics:
- Best 1H Performance Since 2010: Hedge funds gained 5.5% through July, fueled by first-half AI trade momentum before July equity selloffs dented returns.
- Shift to New Relationships: 60% of limited partners plan to allocate funds toward establishing new relationships with other existing hedge funds rather than relying solely on incumbent managers.
- Top Strategies & Sectors: Allocator demand was highest for stock-picking equity and multi-manager platforms, with tech/media/telecom (TMT), healthcare, and energy as favorite sectors.
- Private Credit Cools: Investors expressed reduced bullishness toward private credit amid concerns over opaque valuations, non-traded fund redemptions, and AI disruption in software.
💥 The Big Picture: As private credit faces valuation scrutiny, institutional investors are rotating back into active, multi-manager hedge funds to navigate broader market volatility.