Hedge funds in Europe gain favour as investors steer away from US, says BNP Paribas

By Nell Mackenzie

LONDON (Reuters) -Investors plan to increase their hedge fund exposure to prefer Europe and Asia over the U.S. for the first time since 2023 as wealthy financiers diversify away from the United States, a BNP Paribas survey sent to clients on Thursday showed.

Heightened U.S. policy uncertainty and tariffs have prompted investors to move away from U.S. markets this year, with Europe also benefiting as Germany ramps up fiscal stimulus to boost long-term growth prospects.

European hedge funds surveyed by BNP Paribas said that they received higher inflows of investor money than elsewhere in the world during the first half of 2025.

Europe was the top region with 37% of investors adding money in the first half of 2025, while 33% of allocators planned to add more in the second half, the survey showed.

Hedge funds in the U.S. and Asia shared a little less than half, 47%, of the money flowing into hedge funds and Europe took the rest.

Around a third planned to increase hedge fund investments in the Asia-Pacific region and Europe, whereas 14% said they would invest in North American-based hedge funds, the report said.

BNP Paribas' Hedge Fund Outlook surveyed 140 financiers in 16 countries representing $960 billion of hedge-fund-related assets.

Credit hedge funds reported the highest inflows, around $4.5 billion, from investors, followed by multi-manager hedge funds which trade many strategies under one roof and then stock trading hedge funds.

Global equity funds outside the United States drew their biggest inflows in more than four-and-a-half years in July, Reuters reported earlier this month.

Smaller and mid-sized hedge funds, all under $10 billion, received the most investor money, BNP Paribas said.

Hedge fund investors are still predominantly based in the United States, said the survey.

About 73% of the survey respondents who invest in hedge funds were based there, compared to 32% who were in Europe and 23% in Asia (ex Japan).

(Reporting by Nell Mackenzie; Editing by Sharon Singleton)