January 2025

December proved a mixed bag for hedge fund strategies, with macro emerging as the standout performer. Market movements were heavily influenced by geopolitical shifts, particularly in the Middle East, and actions by President-elect Trump. The HFRI Fund Weighted Composite Index declined 0.2%, while the Asset Weighted Composite Index posted a gain of 0.8%.

2024 was about further growth in private markets, signalling a transformative shift in global investment trends. While investment managers opened up access to private markets, the standout trend was the continued rise of private credit, fuelled by economic uncertainty and evolving capital market dynamics. Private markets look set to maintain momentum in 2025.

It is time to jump on the outlook bandwagon and make a handful of educated predictions on trends in private markets for 2025. Five, in alpha order: data centers and energy transition, private credit, sovereign wealth funds, sports and the wealth channel. Outlook reports predicted private markets will grow to more than $20 trillion by 2030.

Shifting investor preferences, capital raising challenges and operational resilience have been key themes and will continue to impact fund managers. Five trends will shape the year ahead: separately managed accounts on the rise, slower growth for multi-strategy funds, challenging capital raising, growing markets in the Middle East and Asia, and prime broker selection.

2024 was a pivotal year for AIMA and the alternative investment industry. Two landmark legal victories, the overturning of the Private Fund Adviser Rule and the expanded Dealer registration requirement, reaffirmed the value of proactive industry engagement. With Paul Atkins appointed SEC Chairman, 2025 is poised to usher in a recalibrated regulatory environment.

As the global shift in talent and capital flows defines the post-pandemic world, Dubai has emerged as the preferred location for alternative investment in the region. The Centre is home to 65 pure play hedge funds, with 45 of these part of the billion-dollar club. The UAE alone has a large concentration of private wealth, estimated at USD 996bn.

For decades family offices have been entrusted with preserving generational wealth. They are now transforming into prominent players across a wide range of asset classes. The 2024 Family Office Deals Study of PwC examines the transactional behaviour of 11,000 global family offices, finding that more than 75% were established since 1993.

A year ago I wrote a piece for this forum, How to Run With the Crypto Bulls. Now, as we look to the coming year, let us consider the ways a matador would manage a big charging crypto bull. Institutions such as public pensions are choosing to invest via ETPs rather than hold tokens directly, and the maturing crypto space has caught up to hedge fund standards.

2024 has been an interesting year for the alternative investment space, with activity across the board. Family offices are significantly increasing their allocations to private markets, with nearly 52% of portfolios now allocated to areas like private equity, private credit and infrastructure. APAC will continue to grow as firms hire locally in Korea and Japan.

Antin Infrastructure Partners closed its fifth flagship fund at EUR 10.2 billion, surpassing its EUR 10 billion target and marking the largest infrastructure fund closed in 2024, ahead of the $6.4 billion Asia Pacific Infrastructure Fund of KKR. Over 90% of investors from the previous fund recommitted, alongside 120 new investors.

Blackstone is targeting $5 billion for its largest life sciences fund to date, writes the Wall Street Journal, focusing on investments in late-stage clinical drug and medical device developers. The fund has already secured commitments including up to $160 million from the Teachers Retirement System of Louisiana.

Apollo Global Management is gearing up to launch its largest-ever private equity fund early this year, targeting a record $25 billion in capital. Fundraising is set to start in early 2025 and underscores the growth ambitions of the firm as well as its ability to attract substantial investor interest across diverse sectors.

Private equity continues to make inroads into professional sports, with Ares Management acquiring a minority stake in the Miami Dolphins, a significant move into the NFL. Ares joins Arctos Sports Partners, another private equity firm active in professional sports with stakes in MLB, NBA and NHL teams, following an NFL policy change.

Carlyle closed its third Carlyle Credit Opportunities Fund with $7.1 billion in investable capital, its largest credit fundraise to date. The figure includes $5.7 billion in commitments from institutional investors and leverage, making CCOF III nearly 30% larger than its predecessor and bringing the opportunistic credit strategy to around $17 billion.

Constellation Wealth Capital, founded in 2023 by Karl Heckenberg, surpassed expectations by raising over $1 billion for its first fund. The Chicago-based firm provides flexible, long-term capital solutions to registered investment advisor firms, enabling them to maintain independence while pursuing strategic growth. It has completed eight investments.

UniCredit expanded its partnership with Blackstone to offer clients the Blackstone Private Equity Strategies Fund, broadening access to private equity investments traditionally reserved for professional investors. The semi-liquid, actively managed fund builds on a collaboration that began last year with access to the European private credit fund.

According to the Financial Times, US-listed Blue Owl Capital is pursuing strategic partnerships to strengthen its position in the private markets. Known for direct lending, GP stakes and real estate, the firm has recently acquired IPI Partners and partnered with ICONIQ, alongside existing stakes in Vista Equity Partners, Silver Lake, Stonepeak and Bridgepoint.

Blackstone anticipates a significant rise in North American private equity activity, projecting that exits could double in 2025. The outlook is attributed to improving market conditions, stabilised valuations and increased interest from strategic buyers and public markets, alongside the substantial dry powder held by funds.

Recent hires by Citadel suggest the firm is building out an activist approach, marking a shift from its traditional focus on trading and market-making. Pawel Serej and Nabeel Banji of Elliott Management join the firm. It is interesting given the deep analytical capabilities and significant capital that will give it clout to influence corporate strategies.

Saba Capital of Boaz Weinstein has aggressively moved against seven UK-listed investment trusts, acquiring stakes of 19% to 29% in each and becoming their largest shareholder. Targets include Baillie Gifford US Growth Trust and Edinburgh Worldwide. Saba has called for shareholder meetings to push for board changes and propose tender offers and buybacks.

Millennium Management is seeding two new investment teams, allocating $1.5 billion to Robert Tau, formerly of Balyasny, and $1.75 billion to Daniel Engel-Hall, previously at Marshall Wace. The news reflects the strategy of the global multi-strategy manager to diversify its portfolio and back seasoned talent.

There have been very few non-multi-strat pod hedge funds publicly launched recently, so it is encouraging to see Amsterdam-based Palinuro Capital begin trading mid-month, reports Dow Jones. The macro fund will invest in interest rates and FX derivatives and is aiming to deliver 10% annual returns.

Hedge fund performance in 2024 was pretty good and a standout was the Oculus Fund of D.E. Shaw, which posted a 36.1% return, writes Bloomberg. What is impressive about this macro multi-strat fund is not necessarily the 2024 performance but its track record of never having had a down year since its 2004 inception.

Vanguard is expanding its private wealth management business with a new Advice and Wealth Management division launching this month. The $900 billion unit, led by industry veteran Joanna Rotenberg, formerly of Fidelity Investments, aims to deliver diversified, low-cost solutions and marks the most significant move by new chief executive Salim Ramji.

AIMA issued a call to address systemic barriers crypto-focused hedge fund managers face in accessing essential banking services. Its research report, The Debanking Dilemma, reveals that 75% of surveyed crypto hedge funds have encountered difficulties securing or expanding banking services, starkly contrasting with traditional alternative investment managers.

On 12 December 2024 the FCA published Consultation Paper CP24/28 on operational incident and third party reporting. It proposes a clearer definition of what constitutes an operational incident, when it should be reported, and a standardised template. Third-party proposals would apply to a limited cohort including PRA authorised and enhanced scope SMCR firms.

The FCA launched its consultation for Consumer Composite Investments on 19 December 2024. Under the post-Brexit Smarter Regulatory Framework, the CCI regime broadly repeals and replaces the EU-based PRIIPs regime, felt in the industry to be onerous for firms and incomprehensible for investors. The consultation remained open until 20 March 2025.

The FCA published Discussion Paper DP24/4 on regulating cryptoassets, focusing on admissions and disclosures and market abuse. At present its remit covers money laundering, terrorist financing and financial promotions only. Under government plans this will extend to a more comprehensive conduct regime, with the regime going live from 2026 onwards.

The SEC charged Silver Point Capital with failing to establish, implement and enforce policies reasonably designed to prevent the misuse of material non-public information relating to its participation on creditors committees. The complaint concerns the restructuring of defaulted Puerto Rico municipal bonds. Silver Point intends to contest the charges.

The SEC announced charges against two private companies and one registered investment adviser for failing to timely file Forms D for multiple unregistered securities offerings in violation of Rule 503 of Regulation D. The charged entities collectively failed to provide timely information on approximately $300 million of securities offerings.

The US District Court for the Southern District of Texas entered a consent order imposing permanent injunctive relief, a civil monetary penalty, restitution and equitable relief against Marcus Todd Brisco for the fraudulent solicitation and misappropriation of funds in connection with two commodity pools. It stems from a CFTC complaint filed in January 2023.