Half of investors say half of investors would like to spend more on hedge funds.

Written by Neil McKenzie

LONDON (Reuters) – Half of global investors surveyed by prime brokerage Bank of America’s management plan to allocate more money to hedge funds this year, while 37% wanted no change.

The results represent a 2% rise in those wanting to spend more on hedge funds from the start of 2024, a report issued by the bank to clients on Friday showed.

The survey was drawn from responses from 256 companies overseeing a combined amount of more than $1 trillion invested in hedge funds.

Investors who were dumping their hedge fund holdings and returning their money to 7% from 12% in 2023, BOFA’s 2025 Hedge Fund Outlook Report said.

The bank said that dissatisfied investors believe returns should have been better. Of those who were dissatisfied, 73%, cited poor performance as the reason for wanting a refund.

Other reasons investors were unhappy were when hedge funds changed their investment strategy and when hedge funds simplified, or consolidated, their portfolio, the survey said.

Allocators also worry that their hedge funds are accumulating in crowded trading positions where everyone has the same idea, the report said. Crowded positions can grow expensive if speculators rush out at the same time.

Hedge funds growing too large to invest without moving the market were also a major concern from last year, the report said.

She said that about the same investors as last year had hedged fears that hedge funds that said they specialized in one type of investing were actually doing something else, or so-called style drift.

Giftedness was named as an ongoing concern, as well.

Smaller hedge funds with more than $500 million in assets were a fifth less likely to see their investors leave.

Family offices, pension plans, endowments and foundations were most likely to pick up all of their money off the table, rather than part, the report said.

In 2025, investors are more interested in trading stocks and bonds and less in trend followers and systematic money playing into macroeconomic events.

These hedge fund clients have been more successful in negotiating fees than this time last year.

About 60% of investors won fee rebates compared to about half of last year, and there was a slight rise to 22% from 17% who received delays.

(Reporting by Neil McKenzie; Editing by Dara Ranching and David Evans)