Key Takeaways
- • Almost half of hedge fund allocators (versus just 4% planning cuts) intend to increase allocations in 2026, signaling strong institutional demand for the asset class heading into the year.
- • Quantitative trading strategies rank as the most sought-after hedge fund approach, with 23% of allocators planning to increase exposure, driven by solid 2025 performance (10.5% aggregate gain) and uncorrelated returns relative to equities.
- • Discretionary macro strategies rank second in demand with 21% of allocators adding exposure, as both quant and macro strategies offer diversification benefits after another strong year for stock markets.
- • Quant funds dominated fundraising with more than 70% of the industry's $78 billion in net inflows during 2025—their second consecutive year leading by a wide margin—with standout performers including Qube Research, D.E. Shaw, and AQR.
- • Over a five-year horizon, quantitative strategies have been the best-performing hedge fund category, while systematic macro strategies have underperformed and faltered in allocator demand.
Summary
Hedge funds are entering 2026 as the most sought-after asset class among institutional allocators, according to Goldman Sachs analysis of more than 300 hedge fund allocators. Nearly half of allocators (versus just 4% planning reductions) intend to increase their hedge fund allocations, reflecting strong confidence in the sector's potential to deliver uncorrelated returns in an equity-heavy investment environment.
However, demand is highly concentrated within specific strategies. Quantitative trading—which relies on computer models and algorithms rather than human judgment—has emerged as the clear winner, with 23% of allocators planning to increase exposure on a net basis. This preference follows solid 2025 performance: quant funds gained 10.5% in aggregate despite market turbulence in July and October. Leading firms including Qube Research, D.E. Shaw, and AQR posted standout results, reinforcing allocators' confidence in the category.
Discretionary macro strategies rank close behind as the second most desired approach, with 21% of allocators planning to add exposure. These funds execute human-driven bets on global economic trends spanning interest rates, currencies, and commodities. Both quant and macro strategies delivered competitive returns in 2025 and offer meaningful diversification from equity-heavy portfolios, particularly following another strong year for stock markets.
The fundraising dominance of quant strategies underscores their appeal. Quant funds captured more than 70% of the industry's $78 billion in net inflows during 2025—marking their second consecutive year leading by a wide margin. Over a five-year track record, quantitative strategies have been the best-performing hedge fund category overall. By contrast, systematic macro strategies have faltered, reflecting weaker performance and diminished allocator interest relative to discretionary macro approaches.
Goldman's analysis indicates that allocators remain "focused on adding uncorrelated exposure to their hedge fund portfolios," suggesting institutional investors view hedge funds primarily as portfolio diversifiers rather than standalone return drivers in an environment where traditional equity and bond correlations remain elevated.
However, demand is highly concentrated within specific strategies. Quantitative trading—which relies on computer models and algorithms rather than human judgment—has emerged as the clear winner, with 23% of allocators planning to increase exposure on a net basis. This preference follows solid 2025 performance: quant funds gained 10.5% in aggregate despite market turbulence in July and October. Leading firms including Qube Research, D.E. Shaw, and AQR posted standout results, reinforcing allocators' confidence in the category.
Discretionary macro strategies rank close behind as the second most desired approach, with 21% of allocators planning to add exposure. These funds execute human-driven bets on global economic trends spanning interest rates, currencies, and commodities. Both quant and macro strategies delivered competitive returns in 2025 and offer meaningful diversification from equity-heavy portfolios, particularly following another strong year for stock markets.
The fundraising dominance of quant strategies underscores their appeal. Quant funds captured more than 70% of the industry's $78 billion in net inflows during 2025—marking their second consecutive year leading by a wide margin. Over a five-year track record, quantitative strategies have been the best-performing hedge fund category overall. By contrast, systematic macro strategies have faltered, reflecting weaker performance and diminished allocator interest relative to discretionary macro approaches.
Goldman's analysis indicates that allocators remain "focused on adding uncorrelated exposure to their hedge fund portfolios," suggesting institutional investors view hedge funds primarily as portfolio diversifiers rather than standalone return drivers in an environment where traditional equity and bond correlations remain elevated.
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