Institutional investors are increasingly favoring hedge funds in Europe and Asia over the United States, marking the first such shift since 2023, according to BNP Paribas’ latest survey. The move reflects growing concerns over U.S. policy uncertainty and trade tensions, prompting diversification into more stable and growth oriented regions.
Europe led global inflows in the first half of 2025, with 37% of investors adding capital to European hedge funds. Asia-Pacific also saw rising interest, while only 14% of respondents planned to invest in North American funds. Credit hedge funds attracted the most inflows around $4.5 billion followed by multi-manager and equity strategies. Smaller funds managing under $10 billion received the bulk of new capital, signaling a preference for agility and specialization.
Despite the shift in allocations, the investor base remains U.S. centric, with 73% of hedge fund allocators based in the United States. A BNP Paribas survey covered 140 financiers across 16 countries, representing $960 billion in hedge fund assets.