The hedge fund industry is undergoing a “Great Multi-Asset Reset,” driven by the need to generate uncorrelated alpha in increasingly complex markets. As per a report published in Hedgeweek, a recent survey of over 100 hedge funds and allocators reveals a striking paradox: while the majority of funds are turbocharging their strategies, their underlying technology is struggling to keep pace with their ambition, creating a critical bottleneck to growth.

Strategy and Demand Shift: Three-quarters of hedge funds reported significantly expanding or diversifying their strategies within a short 18-month period. This strategic pivot is a response to allocators (investors), who are continuously raising the bar. Allocators are actively demanding niche, non-traditional, and uncorrelated strategies—those that can perform regardless of broader market movements. The goal is to move beyond simple market returns (beta) and access high-quality, idiosyncratic alpha across fixed income, equities, and private markets.

The Technology Wall: The core problem is technological debt. Every fund aggressively expanding its mandate—moving from single-asset classes to multi-asset platforms, incorporating complex alternative data, or engaging in sophisticated relative value trades—is hitting a wall. Their legacy systems and outdated infrastructure cannot match the speed, volume, and complexity of data required by these advanced strategies. The article highlights that technology is the single biggest impediment to funds capitalizing on their strategic vision.

Institutional Requirements: Exacerbating the challenge is the need for institutional-grade infrastructure. Allocators will only commit capital to complex, niche strategies if the fund can prove robust, enterprise-level controls, rigorous risk management, and transparent reporting. This demand for institutional infrastructure adds cost and complexity, making it harder for funds to scale up new strategies without a comprehensive, modern technology overhaul.

The Reset, therefore, is defined by the tension between urgent strategic diversification and the systemic failure of technology to enable it. Funds that successfully bridge this gap will define the next generation of industry leaders.

End Notes

Source: https://www.hedgeweek.com/the-great-multi-asset-reset-how-hedge-funds-are-building-tomorrows-portfolios-today/