- Goldman Sachs’ hedge fund allocator survey points to 2026 inflows rising to the highest level since 2017, implying stronger industry hiring.
- Hiring demand is expected to concentrate in quant and equity long/short strategies, supported by their strong 2024 returns and high allocator satisfaction.
- Asia is the region where allocators most expect hedge fund hiring to accelerate in 2026.
- Credit strategies are losing allocator favor, while multi-strategy platforms remain in use but are drawing less new capital than in 2023.
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The Goldman Sachs survey, as reported by Sarah Butcher, reveals that allocators expect to increase their hedge fund allocations in 2026 to levels not seen since 2017, setting the stage for strong hiring activity within the hedge fund industry. Crucially, this capital will not be spread evenly: strategies such as quant funds and equity long/short are expected to see the most hiring demand due to their perceived opportunity for alpha generation.
Geographically, Asia emerges as the region where allocators anticipate the greatest hiring pressure. This reflects confidence in Asia’s growth prospects, rising institutional capital, and strategic interest in equity and quant strategies in major Asian hubs.
In contrast, credit funds—once favored—are losing ground. The survey indicates reduced allocator appetite for credit-focused strategies relative to quant and long/short equity, consistent with broader trends of performance relative to interest rate movements and credit spreads. Multi-strategy approaches are still in the mix but are losing relative attractiveness compared to their 2023 peak.
Backing these sentiment indicators is strong performance data: in 2024 equity long/short strategies delivered above-average returns (≈15.2%), quant funds likewise posted double-digit gains, and manager satisfaction (“met or exceeded expectations”) rose significantly—underscoring why allocators feel justified in committing more capital. However, expectations may not align across all strategies or regions, creating risk of disappointment for laggards.
Strategic Implications:
- Firms need to build or scale quant and equity long/short teams aggressively, especially in Asia, to capture expected hiring demand.
- Credit-focused hedge funds may need to pivot, either by adjusting product mix, demonstrating distinct alpha, or repositioning strategy to remain competitive.
- Recruitment in Asia should emphasize local talent pools, regulatory savvy, and infrastructure to serve equity and quant strategies.
- Allocators should monitor whether manager performance continues to justify elevated allocations; as dispersion widens, differentiation will matter.
Open Questions:
- Will quant strategies sustain their momentum in environments of shifting monetary policy or declining volatility?
- How will Asia’s regulatory landscape and talent constraints affect the speed and cost of hiring?
- To what degree will multi-strategy fund platforms consolidate this momentum and win over capital from smaller specialized managers?
- Can long/short equity funds maintain performance if equity markets become more turbulent or if valuation compression intensifies?
Supporting Notes
- Allocators in the Goldman Sachs survey plan to allocate more to hedge funds in 2026 than at any point since 2017.
- Of all hedge fund strategies, quant funds and equity long/short are expected to receive the strongest hiring demand.
- Credit funds have fallen out of favor, while multistrategy funds remain used but are less attractive than in 2023.
- Geographically, Asia is identified as the region where hedge fund hiring is most likely to happen in 2026.
- In 2024, long/short equity delivered approximately 15.2% returns, quant funds posted double-digit gains, and multi-strategy funds (especially large ones) delivered high returns.
- Allocator satisfaction in meeting or beating expectations in 2024 rose above 90%, surpassing prior years.