Hedge Funds See Highest Capital Growth Since 2023

Hedge fund managers have raised more capital in 2026 than originally planned, marking the first such increase in three years. According to a report from Bank of America based on a survey of 321 asset allocators, hedge funds are positioned to be the most popular asset class for the remainder of the year.

This growth follows the industry's strongest first-half performance since 2010. The surge was largely driven by the artificial intelligence boom, though a selloff in AI stocks occurred in July. Investors are currently showing the highest demand for equity and multi-manager platforms, with 60% of limited partners favoring new fund managers over experienced ones.

While sentiment remains high for stock-picking funds, investors are expressing caution regarding private credit funds. These concerns stem from opaque valuations and the potential for AI-driven disruption within the software industry.