Wealthy investors in the US and Asia are redirecting hedge fund allocations away from the US and toward Europe and the Middle East, according to a report by Reuters citing the findings of a Bank of America survey of 263 allocators representing roughly $840bn in assets.

Half of the investors who had planned to invest in US hedge funds last year have now abandoned those plans, the survey revealed, while European allocations exceeded expectations by 8%. The trend reflects the growing presence of global hedge funds in Abu Dhabi and Dubai, offering access to regional markets and local investment structures.

The largest allocators, including pension funds, sovereign wealth funds, and family offices, are increasingly favouring separately managed accounts (SMAs), bespoke investment vehicles tailored for single investors.

Overall, $37bn has flowed into hedge funds so far in 2025, marking the highest level of new capital in the industry since at least 2016. Lock-up periods for funds vary widely, from one-day liquidity to five-year commitments.
Meanwhile, public markets have seen renewed interest in US equity funds, with weekly flows tracked by EPFR reaching nearly $58bn last week.

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