Hedge funds and alternative investments see surge in investor demand

Hedge funds and alternative investments are seeing a surge in investor demand and capital inflows. According to a Bank of America report, fundraising in the first half of 2026 has surpassed initial expectations for the first time in three years, driven by strong investment performance. The sector saw a 5.5% return through July, marking its strongest performance period since 2010.

Investors are increasingly favoring equity-focused, multi-manager, and global investment strategies. Specific interest has been noted in sectors such as technology, media, telecommunications, healthcare, and energy. Notably, approximately 60% of surveyed asset allocators expressed a preference for allocating capital to newer managers over established firms.

Parallel trends are visible in private wealth management. Surveys from HSBC and Endowus indicate that high-net-worth individuals, including a significant portion of Gen Z investors, are raising allocations to alternative assets to hedge against market volatility and seek differentiated returns. In Hong Kong, nearly 42% of accredited investors on the Endowus platform have adopted alternatives, with a strong preference for hedge funds.