The Zhitong Finance App learned that as the bond market volatility intensifies and the stock market continues to fluctuate, Asian pensions, family offices, and other investors are turning their eyes to alternative assets. Private bankers and asset allocators say Asian investors are increasingly seeking asset diversification and are no longer limited to traditional equity and bond allocations. This trend has put new pressure on managers who only go long. Their performance has been scrutinized due to market fluctuations, and it has also brought into question the traditional 60/40 equity bond allocation strategy.
Asian capital seeks new safe havens: hedge funds are sought after
According to Hedge Fund Research (HFR) data, in the second quarter of 2026, global hedge fund assets increased by 409 billion US dollars to 5.6 trillion US dollars, setting the record for the biggest quarterly increase.
Swiss private bank UBP said that since the end of 2024, the entrustment share of its Asian discretionary portfolio management clients invested only in hedge funds has more than tripled, but no specific figures have been provided.
“Over the past few years, US Treasury bonds and government bonds have become less reliable instruments of diversification,” said Paras Gupta, head of discretionary portfolio management at UBP Asia, adding that this has expanded the role of hedge funds in investment portfolios.
Hedge funds also performed relatively well, while the bond market experienced a prolonged downturn during the same period. Safe assets, which are supposed to preserve value, have instead become a source of loss in investment portfolios.
The global hedge fund index tracked by HFR rose 12.4% in 2025, achieving positive returns for the third year in a row, the best performance since 2009. The index has risen another 7% so far this year.
Since the end of 2024, global stocks, as measured by the MSCI World Index, have risen about 36%, while the FTSE Total Return on World Government Bonds Index has declined 7%.
“We really want to increase the allocation of alternative asset classes,” said Rani Piputri, senior public investment director at Danantara Investment Management, a subsidiary of Indonesia's sovereign wealth fund. The agency aims to reach 5% exposure to hedge funds. “Because we want stable returns and keep pullbacks to a minimum.”
New investors enter the market, and hedge funds become “supplements” to traditional portfolios
Niall O'Sullivan, Global Chief Investment Officer at Strategy Advisor Marsh, said that some institutional investors who have not previously been involved in hedge funds now want to get about 10% exposure, especially multi-strategy funds that are less relevant to the general market.
Adeline Tan, head of investment at Marsh Asia, said that wealth management companies, family offices and large investors, including fixed income pensions in Japan, have shown interest because the poor performance of bonds as a risk diversification tool is worrying.
Investors also believe that extreme fragmentation — whether it's a market split between AI winners and losers, or a market split caused by geopolitical rift — has created opportunities for long and short hedge funds to profit from price spreads.
“Within the technology sector, semiconductors outperform software... the US outperforms the rest of the world,” said Daryl Ho, senior investment strategist at DBS.
Albert Yang, head of alternative investments in Asia at J.P. Morgan Chase Private Bank, said that hedge funds are increasingly being used as long-term allocations to manage fluctuations, and mentioned growing market concerns about the risk of AI concentration.
Of course, performance and capital flows within the hedge fund industry are clearly divided. Yang said that the addition of hedge funds is not intended to replace traditional portfolios, but rather as a supplement to enhance the portfolio's resilience to risk through new strategies. Multiple strategic, macro, and quantitative managers who are flexible and can generate returns independent of the direction of the stock market are among the biggest beneficiaries.
Acadian Asset Management is a $233 billion systemic fund that collects data from tens of thousands of companies and runs strategies aimed at moderately but consistently outperforming stock indices. The company's assets in Asia quadrupled in four years.
“We don't think we've seen this level of attention in 20 years,” said Kelly Young, CEO of Acadian.