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Alternative Market Briefing

Institutional investors flock to hedge funds as industry tracks toward $5 trillion
Friday, December 05, 2025

Matthias Knab, Opalesque for New Managers:

Hedge funds are regaining momentum with institutional allocators, putting the industry on course to reach around USD 5 trillion in assets under management (AuM) within the next two years.

According to the latest Hedge Fund Outlook 2026 from With Intelligence, a mix of persistent market volatility, strong demand for multi-strategy products and a renewed wave of fund launches is driving a fresh growth phase for the sector. Total hedge fund AuM climbed to an estimated USD 4.2 trillion by June 2025, and on current trends is projected to reach USD 5 trillion by the end of 2027 - a full year ahead of earlier expectations made in January 2025.

"All the barometers we use to gauge the relative health of the hedge fund industry, from fund flows to strategy diversification and new launches, are pointing to an acceleration of the growth we've seen this year," notes Sam MacDonald, Hedge Fund Research Lead at With Intelligence. Many large institutional allocators remain structurally underweight hedge funds and are now increasing allocations as part of their risk-mitigation toolkit.

Key highlights from With Intelligence's Hedge Fund Outlook 2026
  • AuM on track for USD 5 trillion by 2027 - Industry assets stood at about USD 4.2 trillion through June 2025. Net inflows of roughly USD 43 billion ......................

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