Published by Global Banking & Finance Review®
Posted on August 7, 2025
3 min readLast updated: January 22, 2026
Add as preferred source on GoogleGoldman Sachs reports a shift in investor preferences, with increased interest in hedge funds and declining interest in passive equities and private credit.
By Nell Mackenzie
LONDON (Reuters) -Big investors are turning more cautious on areas such as passive equities and private credit this year and are more interested in hedge funds as a sector than they have been for several years, according to a Goldman Sachs survey.
The survey showed 27% of large investors said they wanted to cut their exposure to long-only passive equities in the second half of the year, compared with 19% in the first half of the year, according to the report sent to clients and seen by Reuters on Thursday.
Private credit, which has been the most popular asset class among large allocators in the last few years, is losing favour: the survey showed that 31% of investors plan to commit money to this strategy in 2025, compared with 41% a year ago.
Goldman Sachs' prime brokerage conducted the survey in July. It surveyed 333 allocators including pension funds, endowments and sovereign wealth funds that oversee more than $1 trillion of assets.
Passive equities, products tracking broader stock indices, have lost appeal as markets have been roiled by tariff shocks, the data from Goldman Sachs showed.
Meanwhile, uncertainty has grown for lending to private companies that need healthy financial conditions to grow, as recent data releases have cast doubt on the U.S. economic outlook.
U.S. duties on imported goods are starting to boost inflation, risking a period of tepid growth and high prices, known as stagflation.
Private credit valuations are not always transparent, two investors at companies overseeing a combined $2 trillion of assets, told Reuters on Wednesday.
One of the investors said they were considering redeeming from investments where they could not determine the values, or so-called "marks", of the portfolios.
Hedge funds had the highest allocator interest, according to the data from Goldman Sachs.
The survey showed that 37% of investors intend to allocate cash to this sector over the remainder of this year, unchanged from the first half. However, just 6% say they are going to decrease investments in it, compared with 10% previously.
It remained uncertain whether investors would stick to their allocation plans, Goldman said.
Even though many might want to invest more money in hedge funds, many were prevented from spending money that was locked into private markets commitments that weren't seeing income, or distributions, Goldman said.
Anecdotally, "these pressures may be easing," the bank said.
(Reporting by Nell MackenzieEditing by Amanda Cooper and Frances Kerry)
The survey indicated that 27% of large investors want to reduce their exposure to long-only passive equities in the second half of the year, up from 19% in the first half.
Private credit, once a favored asset class, is losing appeal, with 31% of investors planning to commit funds to this strategy, reflecting a decline in interest.
According to the survey, 37% of investors intend to allocate cash to hedge funds, maintaining the same interest level as in the first half of the year.
Investor confidence is being impacted by tariff shocks and uncertainty regarding the U.S. economic outlook, which is raising concerns about inflation and potential stagflation.
Investors have expressed concerns about the transparency of private credit valuations, with some considering redeeming investments where portfolio values are unclear.
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