In July of 2025, BNP Paribas’ Capital Introduction team surveyed 140 allocators who invest or advise on over $960 billion in hedge fund assets as well as 137 hedge fund managers with $700 billion in assets. This report provides insights into hedge fund performance, asset allocation, and regional demand.
Below are the 4 key findings of the survey, highlighting the current state of the hedge fund industry.
The first half of 2025 has shown real momentum: hedge funds are delivering on their target returns, Europe is attracting capital and quant equity is the strategy to watch.
Marlin Naidoo, Global head of Capital Introduction
1. Hedge fund performance is on track
Hedge funds are on track to deliver their target return of 9.34% for 2025. The top-performing strategies were quant equity, event-driven, and quant multi-strategy, which generated returns of 6.73%, 6.66%, and 6.56%, respectively. These strategies have been successful due to their ability to adapt to changing market conditions. Quant equity, in particular, has been able to capitalise on market trends. Overall, hedge fund performance is strong in the first half of 2025, a positive sign for the industry.
2. Europe in focus
Europe was the top region for allocators in the first half of 2025, with 37% of allocators adding to their European exposures. European managers saw over 50% of the net inflows, according to the manager survey. This trend is expected to continue in the second half of the year, with 33% of allocators planning to add more to their European exposures. The region’s strong economic growth and attractive valuations have made it an attractive destination for investors. Additionally, the European market offers a diverse range of investment opportunities, from established companies to emerging start-ups.
3. Private banks lead the charge
Private banks and wealth managers have increased their hedge fund assets by over 10% in the first half of 2025, the highest percentage increase across all allocator types. This is a significant increase, driven by their desire to diversify their portfolios and generate returns in a low-yield environment. Private banks have been actively seeking alternative investment opportunities, and hedge funds have been a key beneficiary of this trend. As a result, private banks are now a major driver of growth in the hedge fund industry.
4. Tactical trading dominates
Tactical trading strategies, such as discretionary macro and quant equity, have been popular among allocators in the first half of 2025. Discretionary macro was the top strategy that respondents allocated to in the first half of 2025, while quant equity is expected to be the most in-demand strategy in the second half of the year. Tactical trading strategies offer investors the flexibility and agility they need to succeed in today’s fast-paced markets.
In conclusion, the hedge fund industry is on track to deliver expected performance in 2025, with an average return of 4.83% in the first half. Europe is a top destination for investors, and private banks are leading the charge in allocations. Tactical trading strategies are in high demand, with quant equity and discretionary macro being top choices. Overall, the industry is delivering, positioning hedge funds for continued growth and success in the second half of 2025, with target returns of 9.34% within reach.
Should you want to learn more or access the report, please contact the BNP Paribas Capital Introduction team.