US Hedge Fund Market size is set to grow by USD 662.74 bn from 2024-2028, growing investor interest in alternative investments boost the market- Technavio

NEW YORK, March 27, 2024 /PRNewswire/ -- The global US hedge fund market size is estimated to grow by USD 662.74 bn from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of  7.9%  during the forecast period.  The US hedge fund market caters to investors seeking diversification from traditional assets through alternative investments like crypto hedge funds. With inflation rates averaging 2% annually and reaching 7% in 2021, demand for uncorrelated assets increases. Hedge funds offer high returns and diversification, utilizing complex operational requirements in the cryptocurrency sector, blockchain technology, and related assets. Institutional investors and high-net-worth individuals explore business opportunities, revenue streams, and risk management techniques in the hedge fund market, with offshore segments providing tax efficiency, global access, and infrastructure support. Key players include Investcorp-Tages, Engadine Partners, and others. 

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This hedge fund market in US report extensively covers market segmentation by Type (Offshore, Domestic, Fund of funds) Method (Long and short equity, Event driven, Global macro, Multi strategy and others) End-user (Institutional, Individual) Geography (North America)

Market segmentation by Type
The Hedge Fund Market in the US continues to evolve, with complex operational requirements driving innovation. Crypto Hedge Funds have emerged as a significant sector, capitalizing on cryptocurrency's volatility and mispricing opportunities. Long and short equity managers use macroeconomic trends, interest rates, inflation expectations, and geopolitical events to identify investment opportunities in traditional markets and digital assets. Cryptocurrencies and related assets offer high returns and diversification for hedge funds, providing uncorrelated assets that can mitigate risk in mainstream financial institutions and corporations. Blockchain technology underpins this growth, with supporting technology, infrastructure, and trading platforms enabling digital asset investing. Business opportunities and revenue streams abound for service providers, including custody solutions and risk management techniques. Institutional investors and high-net-worth individuals seek access to this burgeoning market, with offshore jurisdictions offering tax efficiency and global access. Notable players in the market include Investcorp-Tages and Engadine Partners, navigating the offshore segment with expertise. Asset management businesses must adapt to the evolving landscape, employing advanced risk management techniques to capitalize on market volatility and geopolitical concerns.

•         The US hedge fund market is undergoing significant transformation through technological innovations like algorithmic trading, big data analytics, and AI. Institutional investors and high-net-worth individuals seek alternative investments, including hedge funds, for higher returns and diversification. Hedge funds use complex models, algorithmic trading, and risk management techniques for efficient portfolio construction and effective risk management. Vendors like Elliott Investment Management LP employ AI for overall risk management. Hedge funds offer tax efficiency, global access, and investment in offshore jurisdictions. New trends include crypto hedge funds and investments in digital assets, driven by high returns and uncorrelated assets. Regulatory requirements and complex operational needs present barriers to entry.

•         The US hedge fund market faces regulatory hurdles, including SEC registration and fiduciary duties for investment advisers managing substantial assets. Crypto hedge funds in this sector also encounter CFTC regulations for commodity pool operators and trading advisors. Complex operational requirements and high expenses limit entry, but offer potential for high returns through diversification in digital assets and uncorrelated investments. Supporting infrastructure, such as trading platforms and custody solutions, presents business opportunities for hedge fund managers and service providers.

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The hedge fund market in the US continues to attract institutional investors and high-net-worth individuals seeking alternative investment opportunities amidst market volatility and geopolitical concerns. Asset management businesses employ various risk management techniques to mitigate risks in the offshore segment, offering tax efficiency, global access, and collective investment funds. Securities trading in these funds aims for alpha returns, while portfolio construction and operations require extensive investment backgrounds and expertise. Crypto hedge funds, leveraging cryptocurrency values and blockchain technology, have emerged as a new asset class in the Asia-Pacific region. However, regulatory requirements and complex operational needs present significant barriers to entry for new players.

The Hedge Fund Market in the US is a significant segment of the financial industry, characterized by investment vehicles that use pooled funds to make opportunistic investments. Hedge funds employ various strategies, including long and short selling, derivatives trading, and other alternative investment methods. These funds cater to wealthy individuals and institutional investors seeking higher returns than traditional investment vehicles. The Cryptocurrency sector has gained popularity in recent years, with some hedge funds focusing on blockchain technology and digital assets. The regulatory environment is crucial, with the Securities and Exchange Commission (SEC) and other regulatory bodies overseeing the industry. The industry faces challenges such as high fees, complex structures, and increased competition. Despite these challenges, hedge funds continue to attract investors due to their potential for high returns. The market is expected to grow, driven by increasing institutional interest and technological advancements.

Table of Contents:

1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Method
7 Market Segmentation by End-Users
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Company Landscape
12 Company Analysis
13 Appendix

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SOURCE Technavio