Key Takeaways
- • Hedge fund managers and state-backed investors are positioning for heightened market volatility in 2026, driven by geopolitical tensions, U.S. trade policy uncertainty under President Trump's administration, and diverging central bank interest rate cycles across major economies.
- • Macro and trend-following hedge fund strategies are expected to outperform in the volatile environment, with Abu Dhabi Investment Council's portfolio up 13% year-to-date and historical precedent showing such strategies returned over 40% during the 2022 market downturn when equities fell more than 20%.
- • Shiv Srinivasan, chief investor at Abu Dhabi Investment Council, explicitly favors macroeconomic strategies and CTAs (commodity trading advisors/trend funds) for 2026, citing their strong historical performance during periods of market stress and elevated volatility.
- • Robyn Grew, CEO of Man Group ($214 billion in assets under management), confirmed that volatility and asset price dispersion create attractive trading opportunities for hedge funds and alternative strategies, positioning the firm's macro and trend fund offerings as beneficiaries of expected market turbulence.
Summary
Leading hedge fund managers and sovereign wealth fund investors are actively positioning portfolios to capitalize on anticipated market volatility throughout 2026, according to statements made at the Abu Dhabi Finance Week conference on December 9. The outlook reflects a consensus among institutional investors that geopolitical instability, erratic U.S. trade policy under the Trump administration's return to the White House, and diverging monetary policy trajectories across major central banks will create sustained opportunities for volatility-focused investment strategies.
Shiv Srinivasan, chief investor at the Abu Dhabi Investment Council, articulated the opportunity thesis plainly: "With pain comes opportunity." He attributed rising market volatility to geopolitical events and upcoming global elections, positioning macro strategies and long-volatility positions as preferred portfolio allocations for 2026. Notably, Srinivasan's current hedge fund portfolio has delivered 13% returns year-to-date, with particular strength from macroeconomic and trend-following strategies. He specifically highlighted that these same strategy types generated returns exceeding 40% in 2022, when global stock markets experienced declines exceeding 20%, demonstrating the defensive and opportunistic characteristics of such approaches during periods of acute market stress.
CTAs (commodity trading advisors), also known as trend funds, operate as systematic traders that maintain small positions across multiple asset classes to systematically identify and trade rising and falling prices. These strategies have emerged as a preferred vehicle for investors seeking to benefit from the expected volatility environment without concentrated directional bets.
Robyn Grew, CEO of London-listed Man Group—a $214 billion investment manager that oversees substantial macro and trend fund portfolios—affirmed the investment case for volatility-oriented strategies. "Yes, we like a bit of volatility. Yes, we like a bit of dispersion," Grew stated, underscoring that hedge funds and alternative strategies are specifically designed to extract returns from market dislocations and price divergence across asset classes. Her remarks reinforce institutional conviction that the macroeconomic backdrop anticipated for 2026 will favor active, volatility-responsive investment management over passive long-equity exposure.
Shiv Srinivasan, chief investor at the Abu Dhabi Investment Council, articulated the opportunity thesis plainly: "With pain comes opportunity." He attributed rising market volatility to geopolitical events and upcoming global elections, positioning macro strategies and long-volatility positions as preferred portfolio allocations for 2026. Notably, Srinivasan's current hedge fund portfolio has delivered 13% returns year-to-date, with particular strength from macroeconomic and trend-following strategies. He specifically highlighted that these same strategy types generated returns exceeding 40% in 2022, when global stock markets experienced declines exceeding 20%, demonstrating the defensive and opportunistic characteristics of such approaches during periods of acute market stress.
CTAs (commodity trading advisors), also known as trend funds, operate as systematic traders that maintain small positions across multiple asset classes to systematically identify and trade rising and falling prices. These strategies have emerged as a preferred vehicle for investors seeking to benefit from the expected volatility environment without concentrated directional bets.
Robyn Grew, CEO of London-listed Man Group—a $214 billion investment manager that oversees substantial macro and trend fund portfolios—affirmed the investment case for volatility-oriented strategies. "Yes, we like a bit of volatility. Yes, we like a bit of dispersion," Grew stated, underscoring that hedge funds and alternative strategies are specifically designed to extract returns from market dislocations and price divergence across asset classes. Her remarks reinforce institutional conviction that the macroeconomic backdrop anticipated for 2026 will favor active, volatility-responsive investment management over passive long-equity exposure.
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