In 2026, hedge funds can expect increased competition for institutional capital; geographic expansion; and a dip into retail channels, according to Agecroft Partners LLC. Its annual list of hedge fund predictions—based on information shared by more than 2,000 institutional investors in hedge funds—aims to forecast what will happen in the hedge fund industry this year.
In-Demand Strategies
Agecroft projected an increase in interest investments managed using market-neutral and low net-equity strategies, as a “widening valuation dispersion across global equity markets is creating a more favorable environment for active managers to generate alpha on both the long and short sides of their portfolios,” according to an Agecroft report.
The firm anticipated that more long/short equity managers will focus on value stocks, as it expects value stock performance to cycle back to long-term averages. Additionally, Agecroft predicted continued growth of quantitative and systematic strategies into 2026, which the firm notes have often shown negative or low correlation to the broader capital markets during periods of stress.
Agecroft also predicted more demand for private debt, as institutional investors incorporate less-liquid, uncorrelated strategies such as reinsurance, life settlements and litigation finance. While not directly hedge fund strategies, “These strategies can appear especially attractive in stable or rising market environments, where credit performance remains benign,” the report stated.
Marketing and Capital Formation
Agecroft noted that 2026 will be a strong fundraising year for top managers and in-demand strategies—but less so for everyone else, as skilled managers can navigate continued expected market volatility. The firm predicted that 5% of hedge funds will attract 90% of net flows.
The hedge fund asset class received strong inflows in 2025. The industry as a whole saw $226.8 billion in inflows, through November 2025, according to a report from Citco, including $11.8 billion in inflows in November 2025 alone. According to Agecroft, 2026 could see the largest net inflows into the industry in more than a decade.
“I think you’re going to see increased volatility in the marketplace, which is helpful for hedge funds to generate performance,” says Don Steinbrugge, Agecroft Partners’ founder and CEO. “It’s going to be a very good year to raise money.”
As a result, the consultant predicted several trends in marketing, as hedge funds compete for capital from limited partners, including a surge in demand for third-party marketing firms. Agecroft, one such firm, noted it received interest last year from 750 managers looking to be onboarded onto its platform—roughly double the level of interest from two years ago.
Agecroft also projected more capital-introduction events—at which limited partners and general partners can mingle—and record attendance.
Finally, Steinbrugge says he expects more hedge funds will access retail and wealth management channels for growth.
Talent Wars and Geographic Expansion
Multi-manager hedge funds are in a battle for talent, leading to the likelihood that benefits for hedge fund employees will improve. Compensation, revenue-sharing opportunities and remote-work opportunities are all proliferating, as funds aim to hire and retain the best staffers.
These firms—specifically those focused on quantitative strategies—are aggressively pursuing specialized talent, including experts in artificial intelligence and top Ph.D.s in quantitative fields, as hedge funds aim to build and safeguard proprietary algorithms and other advanced technology tools.
Hedge funds have also been expanding geographically, a trend expected to continue this year. Several firms have opened up across the Middle East, including in both Dubai and Abu Dhabi in the United Arab Emirates. In the U.S., Steinbrugge says he expects more firms to open offices or relocate to southern Florida. Steinbrugge notes that in the era of hybrid and remote work, a fund’s location is less important than it used to be.
“Traditionally, New York and London were hedge fund hubs, and all the investors went to those two cities,” Steinbrugge says. “[At the time,] if an investor [didn’t] come to your office, it’s really hard to get an allocation. So if you were based in Cleveland or Columbus, Ohio, or Detroit or St. Louis or some other city, it was really hard to get people to come to your office, which meant it was much harder to get an allocation.”
The emergence of southern Florida as a hub for hedge funds and financial services has also resulted in a snowball effect, both in industry growth and recruiting. Lower taxes and better weather have attracted hedge fund executives to the region.
“We have passed a tipping point with southern Florida as a hedge fund destination,” Steinbrugge says. “You’ve had so many funds either open or relocate to Florida that now that it’s becoming a destination, that is accelerating the relocation process. Same with Dubai.”
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