Hedge funds are a top draw in Asia as investors look beyond bonds
Private bankers and asset allocators told Reuters that Asian investors are increasingly seeking asset diversification compared to their usual allocations to equities and bonds.
Hedge funds are experiencing a surge in popularity among investors in Asia, who are seeking to diversify their portfolios away from traditional bonds and equities. Private bankers and asset allocators have reported a significant rise in demand for hedge fund investments, driven by concerns over the volatility in debt markets and the underperformance of stocks.
According to data from Hedge Fund Research, global hedge fund assets reached a record $5.6 trillion in the second quarter of 2026, a $409 billion increase from the previous quarter. In Asia, the share of hedge-fund-only mandates among discretionary portfolio management clients has more than tripled since the end of 2024. This shift is attributed to hedge funds' relatively stable performance during the challenging periods in bond markets, which have turned once-safe assets into losers in investors' portfolios.
US Treasuries and government bonds have become less reliable diversifiers due to their recent poor performance. Hedge fund performance has remained relatively robust, with a global hedge fund index gaining 12.4% in 2025 and another 7% year-to-date. Investors, including pensions, family offices, and large institutions, are increasingly allocating around 10% of their portfolios to hedge funds, especially multi-strategy funds with low correlation to broader markets.
The growing interest in hedge funds is driven by the need for stable returns with minimal drawdowns and the ability to capitalize on market bifurcations and geopolitical tensions.
Written by urgent.news from The Jakarta Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
