Roughly a quarter of investors surveyed by IG Prime are looking to change which hedge funds invest their money, citing reasons including riskiness, poor performance and size, the prime brokerage firm said in a report on Thursday.
Volatility in financial markets helped the performance of global hedge funds in 2024, lifting returns to an average of roughly 11% for the year, according to hedge fund research firm PivotalPath. So far in 2025, hedge funds have returned 1.3% in the year-to-date as of end-February, said PivotalPath.
While 76% of the 51 institutional clients surveyed by IG Prime said they would keep their hedge funds, 24% said they would switch, the prime broker's 'The State of the Hedge Fund Industry' showed.
Investors that wanted to move cited unhappiness over poor performance and concerns about how their hedge funds handled risk management, the report said.
These investors also worried about size.
Two fifths said they would look for a smaller hedge fund manager while a quarter said they would switch to a bigger but more capable one.
Most said they were interested in hedge funds which trade stocks. Over a third said they preferred multi-strategy hedge funds, which have many different trading strategies under one roof. Only 8% have interest in commodity funds and those which trade derivatives based on market bumpiness, or volatility, said the report.
