Investors Shift Focus Away from U.S. Hedge Funds for the First Time Since 2023

Investor Trends in Hedge Fund Markets

By Nell Mackenzie

Shifts in Hedge Fund Interest

LONDON, Feb 6 (Reuters) - Investors are looking to decrease their exposure to U.S. hedge funds for the first time since 2023, as talk of the "Sell America" trade has simmered since U.S. President Donald Trump's sweeping Liberation Day levies in April.

Performance and Fees in Hedge Funds

Investors in the U.S. and Europe told Barclays that for the first time in three years they were planning to reduce exposure to U.S.-based hedge funds by around 5% and looking to increase the money they invest in managers in Asia and Europe, according to a survey of 342 investors managing a total of $7.8 trillion in assets. 

Preferred Hedge Fund Strategies

Interest in Asia-Pacific-based hedge funds has more than doubled since the lows of 2024,  Barclays' report said.

U.S. interest in European-based hedge funds more than doubled, Barclays said. In the survey that took place over November and December, investors in Europe told the bank that they were 8% more willing to put money into European managers than last year. 

Interest in hedge fund managers based in Asia grew around 10%. 

Hedge funds remain expensive, survey respondents told Barclays. Average management and performance fees peaked in 2025 for traditional hedge fund products, while the kind that pass through costs have decreased. 

Since 2023, investors' share of gross returns has risen from around 47% to 56%, the bank said. Investors have also seen overall hedge fund returns grow by around 5% this year, it added.     

The biggest hedge fund multi-managers still dominate the industry,  Barclays' data showed.     

Multi-manager assets under management have grown at a constant annual rate of 17% since 2017 to around $435 billion last year, the bank said. 

They were not investors' top strategy pick, however. Hedge funds that base investment decisions on macroeconomic factors and those that trade stocks systematically garnered the highest levels of net allocators in 2025, Barclays said. 

Overall, the hedge fund industry grew by just over a fifth between 2023 and 2025, its largest two-year jump since that between 2011 and 2013, the data showed. 

Equity Market Neutral is the most favoured strategy for 2026, followed by Quant Multi-Strategy, which has been the most sought-after since 2020, according to the survey results. 

(Reporting by Nell Mackenzie; Editing by Amanda Cooper and Mark Porter)