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Hedge fund inflows have gained pace, supported by solid performance and a more constructive market backdrop.
Easing trade tensions and a broad-based equity rebound have reinforced renewed investor confidence and appetite for risk.
In this regard, Industry leverage rose to a five-year high. Additionally, rapidly changing geopolitical conditions could also support the industry as volatility increases across markets. A spike in oil prices, triggered by U.S. military strikes on Iranian nuclear infrastructure, introduced fresh volatility, conditions that favoured strategies aiming at exploiting market dislocations.
Hedge Funds could also see stronger demand as markets rebound while uncertainty remains. Institutional appetite remains steady, with pension funds and sovereign wealth vehicles increasingly turning to hedge funds for diversification and liquidity.
The near-term outlook for the industry could remain optimistic in this regard. Persistently elevated dispersion, geopolitical uncertainty and normalised interest rates create a supportive environment for active management.
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