According to an internal report compiled by Bank of America that was seen by Reuters, the largest multi-strategy funds are on the target list of hedge fund investors aiming to offer more capital towards the largest money managers in 2026.
The survey of 280 asset allocators at the Bank of America global markets capital strategy group also revealed that the same group of multi-managers is gaining greater and greater popularity among hedge fund investors seeking to double up on funds with market-leading returns. The survey is due to be released later this week.
Allocator portfolios had an average of approximately 18 hedge funds in 2025, whereas in the previous year, the median number of such funds was 20. The average per fund allocation increased to $50 million as compared to $42 million in the same period of time.
Global Head of Capital Introduction, Prime Financing at Bank of America, Vanessa Bogaardt, said, “2025 marks a little bit of a turning point where sentiment and allocations have shifted positively, which signals an industry tailwind, fueled by healthy performance over recent years.”
The bank survey of hedge fund investors found that approximately 62 percent negotiated higher capacity rights on allocations in 2025, compared with 17 percent in 2024. About 51 percent of fund investors plan to increase allocations to hedge funds in 2026, ahead of other alternative asset managers.
Bogaardt stated, “We’ve seen allocators focus a lot on securing capacity rights with their high-conviction managers… We are still seeing more allocators planning to expand their hedge fund portfolio in 2026, which means not only are they planning to allocate, they are planning to allocate more to hedge funds.”
The biggest banks of Wall Street, in the latest quarter, have recorded a foaming-at-the-mouth by their prime brokerage units, as they reaped bountiful profits by lending to the large multi-strat funds that overcame the vagaries of financial markets to deliver strong returns.
A report by Bank of America, which has yet to publish the full-year figures, reported that the assets in the hedge fund industry reached record highs of approximately $5 trillion at the end of the third quarter of last year.
The asset growth was largely responsible to high performance and healthy inflows amounting to $71 billion. According to the allocators surveyed by the bank, hedge funds made an average of 11.7 percent returns in the year.
Bank of America added that the top performers in the industry were directional equity long and short funds that yielded returns of 18 percent on average, then discretionary macro funds with returns of 15.4 percent.
