The era of the “diversified basket of 50 managers” is fading. The era of the “high-conviction partnership” is here.
According to a new Bank of America survey of 280 asset allocators, 2026 will be defined by capital flowing into fewer, larger hands—specifically the biggest multi-strategy pods.
📉 FEWER FUNDS, BIGGER CHECKS: The data reveals a clear structural shift in portfolios:
- Consolidation: The average portfolio held 18 funds in 2025 (down from a median of 20 previously).
- Conviction: Average allocation per fund jumped to $50 million (up from $42 million).
- The Goal: Investors are actively consolidating holdings to concentrate capital with market leaders who delivered during the volatility of 2025.
🔐 THE BATTLE FOR CAPACITY: The most telling stat? The fight for access.
- 62% of investors negotiated “increased capacity rights” last year (a massive jump from just 17% in 2024).
- Vanessa Bogaardt (Global Head of Cap Intro, BofA) notes: “We’ve seen allocators focus a lot on securing capacity rights with their high-conviction managers.”
📈 PERFORMANCE CONTEXT: The rush to allocate is fueled by performance.
- Industry Assets: Hit a record $5 trillion in Q3 2025 ($71B in inflows).
- Average Return: Hedge funds generated +11.7% on average in 2025.
- Top Strategies: Equity Long/Short (+18%) led the pack, followed by Discretionary Macro (+15.4%).
💡 ANALYST TAKEAWAY: This is a “Winner Take All” environment. The large Multi-Strats aren’t just attracting capital; they are dictating terms. With 51% of allocators planning to increase exposure in 2026, the challenge for emerging managers will be breaking into portfolios that are actively shrinking their roster to focus on the giants.
👇 Cap Intro & IR Pros: Are you seeing allocators asking for capacity rights earlier in the diligence process than before?