Allocators favouring stock-pickers and multi-managers in 2026, says BoA

Investors are increasingly allocating funds to hedge funds in 2026, with stock-picking and multi-manager strategies leading the charge, according to a report by Reuters citing data from Bank of America. Hedge fund managers raised more capital than initially targeted, marking the first time in three years that fundraising surpassed expectations.

A survey of 321 asset allocators revealed strong demand for equity-focused and multi-manager hedge fund platforms. Demand is high across sectors such as technology, media and telecommunications, healthcare and energy. Pension funds, private banks and diversified hedge fund investment vehicles plan to increase their allocations, indicating a more positive outlook on the asset class following strong half-year returns.

Investors are also shifting their focus, with 60% planning to allocate to new hedge fund managers rather than established names. Stock-picking strategies are expected to remain popular through the end of 2026, with the survey representing investors managing approximately $1tn of hedge fund capital. Strong performance from hedge funds, up 5.5% through July, puts the industry on track for its strongest first-half since 2010, despite volatility in the artificial intelligence sector.

Multi-manager firms have been among the key beneficiaries, offering diversified sources of returns through their ability to allocate capital across multiple strategies and markets. The increased allocations are also benefiting Wall Street's prime brokerage businesses, with major banks reporting strong gains from services provided to large multi-strategy hedge funds.