2016 Hedge Fund Industry Outlook

Institutional investors will continue to be major players in new assets moving into hedge funds, helping to drive an additional $50 billion to $60 billion in assets to the industry during the year. This report looks at 2015 data, industry news and trends and insight from investors and investment consultants to paint a picture of how the hedge fund industry will grow and evolve during 2016.

Key Findings:

  • Given the expectation among asset owners for a continued shift toward alternatives in 2016, including increases in hedge fund allocations, and the diversity and return potential exhibited among the multi-strategy universe in 2015, we expect multi-strategy fund inflows to continue into 2016.
  • Aggregate flows for event driven strategies are also unlikely to rebound significantly in 2016.
  • The hedge fund industry is, barring the occurrence of an outlier event, in a decent position for another year of growth.
  • Credit strategy fund flows will likely be slightly positive in 2016 as the rash of redemptions peters out in H1 along with limited, but apparent new demand for flexible approaches to an uncertain rate environment.