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Private banks and wealth managers increased their hedge fund holdings by more than 10% in the first half of 2025, according to BNP Paribas.
Their cap intro team’s midyear survey of 140 allocators investing or advising on almost $1trn in hedge fund investments found that private wealth continues to be the quickest-growing source of hedge fund allocations.
“Private banks have been actively seeking alternative investment opportunities, and hedge funds have been a key beneficiary of this trend,” the French bank said. “As a result, private banks are now a major driver of growth in the hedge fund industry.”
Here were the other key takeaways:
Quant equity in form — and favour
The top-performing strategy in H1 was quant equity, up 6.73%, and expected to be the most in-demand hedge fund strategy in H2
Event-driven, up 6.66%, was second, and continues to attract attention for improved returns in recent months. Quant multi-strategy, which made 6.56%, was third.
“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,” said BNP.
“Tactical trading strategies offer investors the flexibility and agility they need to succeed in today’s fast-paced markets.”
Europe draws flows
Europe was the top region for allocators in the first half of 2025, with 37% of allocators adding to their European exposures.
Most significantly, 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.
That trends in line with Citco data for July, which found inflows into European funds ($5.1bn) accounted for half of overall global inflows.
Real momentum
Hedge fund performance across all strategies was positive 4.83% in H1 and BNP said the sector was on track to achieve its target 9.34% gain this year.
“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,” said Marlin Naidoo, global head of capital introduction.