Hedge funds are looking to increase fundraising activity and diversification over the next year.

More than half (55%) of hedge funds said that they expect to increase fundraising going into 2025.

This is according to research from Dynamo Software, Dakota and ProFundCom. Last year only 30% of respondents last year stated that same view on fundraising.

With regards to investment allocations, 45% of hedge fund respondents stated they plan to diversify across multiple asset classes over the next twelve months.

On the other hand, only 25% of the general partner marketplace are doing the same.

Hedge fund respondents named the top five geopolitical and economic factors influencing these expected moves as follows: interest rates (cited by 80% of participants), the US presidential election (78%), geopolitical conflicts (63%), economic recession (61%) and global trade tensions (43%).

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Furthermore, of the hedge funds that plan to implement AI in the next year, the top three applications were risk management (56%), predictive analysis (55%), and portfolio optimisation (52%).

“Hedge funds are rightly watching both sides of the AI coin with scrutiny,” said Dynamo Software CEO Hank Boughner. “On the investment side, potentially outsized expectations and ‘AI washing’ are concerns. On the operations side, return on investment is a major factor, but so is the potential disruption of what hedge funds have long contended is their greatest alpha generator – human talent.”

ProFundCom survey partner and founder Paul Das added: “The apparent focus on fundraising and investor relations underscores the desire among hedge funds to grow and preserve assets under management. Accelerating the delivery of prospecting data to fundraising teams will be a key enabler of this goal. We expect to see more hedge funds prioritize the implementation of automation solutions capable of making actionable intelligence directly available through the CMR in real time.”