Hedge fund investors seek new allocation to equity strategies, says BNP Paribas

By Carolina Mandl

NEW YORK (Reuters) - Pension funds, endowments and family offices are planning to make new equity hedge funds allocations through the end of the year, a survey by BNP Paribas showed, as the strategy has led the industry performance in 2024.

The bank interviewed 197 investors to gauge their appetite for hedge funds and their different investment strategies in the second half of the year.

BNP Paribas said 86% of the institutional and private investors, fund of funds and consultants are set to make new hedge fund allocations. Still, only 26% of them will use new cash for the investments.

Equity hedge funds are the most popular planned allocation for the rest of the year for 61% of the interviewees, followed by credit and macro strategies, which were mentioned by 37% and 36% of the investors respectively, the survey showed.

Marlin Naidoo, global head of capital introduction at BNP Paribas, told Reuters that among the equity strategies, there was an increase in interest in fundamental equity long/short hedge funds, as they navigated well a recent volatility in markets. It follows a period when investors were more interested in market neutral strategies and credit.

Equity hedge funds are the top-performers so far this year, up 10.3% through July, according to data provider PivotalPath. On average, all hedge fund strategies posted gains of 6.8% in the same period. That compares with gains of 16.7% for the S&P 500.

Multi-strategy hedge funds, a very popular strategy until recently, were cited by 27% of the investors, while event-driven funds were mentioned by 26%.

(Reporting by Carolina Mandl in New York; Editing by Tomasz Janowski)